All Forum Posts by: Greg Lee

@Greg Lee Property tax payments are not included in your basis.

@Greg Lee.

That's what I've been harping at...  The "profit" is lets say:   income minus expense.  Well your income is the sale price (less cost of the sale e.g. realtor fees, closign costs, etc.).  Your expense is what you bought it for.  So... what did you buy it for?  

The difference between basically the sales price and the purchase price is your profit (buy a widget for $1 and sell it for $3, and your profit is $2, not 3).  The, the long term capital gains tax is generally about 15%..

It may cost yo ur more to 1031 and purchase another property than just to pay the tax.  Meanwhile, you said you wanted to build reserves, etc.  Well, now you will have cash to do that...

@Greg Lee

So, is your profit $186k?

Also, you usually don't get to borrow much from vacant land.

@Greg Lee, I forgot the most important thing for you - if you want to do a 1031 exchange the QI for your exchange has to be involved prior to closing the sale of your old property.  So time is of the essence for you.

@Greg Lee, You can always do a 1031 exchange which would defer indefinitely the taxes on that sale.  That would not generate cash to move to other investments for you.   But real estate is an asset.  It absolutely makes your net worth look better.

Your tax will be the 15% that mentioned.  But also MI will ding you a little less than 5%.  So it could be real money that you defer in the 1031.  

I get it about building your savings.  But losing 20% immediately just to move an asset from one class to another is a pretty tough pill to swallow.  Plus, as long as it's in real estate you can't spend it :)

I'll reach out via pm.

@Greg Lee

@Greg Lee

First lets check:  is your profit on the expected sale $186k?  Or, is the land worth $186k?  What did you pay for it?  Did you make any improvements?

With the sale next week, you've got some stuff to put in place.  You need to find a QI to handle the funds.  You or your attorney can't receive the funds.  It has to be held by a QI.  Don't forget the timings...  @Dave Foster can explain all that better...

Instead of potentially pushing a bad position, you do realize the long term capital gains tax is 15% on the PROFIT, not the proceeds.  Yeah, it sucks to be taxed, but make sure you are doing the 1031 for the right reasons to meet your strategy.