All Forum Posts by: David Krulac

@Yixiong Pan  For the case where we escrowed the potential tax due 5 years later, that was a requirement of the buyer of the property, title company in order to give clear title to the buyer.  It endee up that we were not obligated to pay the inheritance tax and the escrow was refunded to us about two more years later.  No interest was paid to us for the two years our money was in escrow before refunded.

Section 1031 has many requirements, 45 day identification period, and a 180 day settlement period (including the 45 days).  The long term capital gains rate for many people is Federal 20%.  To figure your capitl gain you take your selling price minus selling costs and substract from that your purchase price + buying costs.  You can also substratc major inprovements like an addition etc minus the depreciation already taken.  You should be consulting with your CPA ot tax preparer to account for the specifics of your individual tax situation.  Its complicated and if you violate any of the IRS guidelines it will negate the 1031.  Another rule is that you can't get posession of the net proceeds which must be held by an intermediary, who is not related to you, not your attorney, not your accountant, and not a business associate of yours.

I talked about Section 1031 on Bigger Pockets Podcast #82  

Need tp prepare for Secyion 8 physical inspection of the property.  Peeling paint, inside or outside, handrails on stairs over 2 steps, broken glass, working electric and plumbing and operational heat source.  They look for basic health and safety issues, and the Section 8 office has a phamphlet with their requirements.  Inspection is every year.  

@Yixiong Pan  They do not have records, but are tipped off when the seller's names is "The estate of  xxxxxxx" or when the seller's name is different than the name of the recorded owner, like an executor/executrix title.  Since the seller is deceased obviosly they can't sign the deed as seller, so that's an indication that something is going on.  If its a guardenship they seller is alive but not able to sell for some reason. 

@Yixiong Pan  Pennsylvania State Inheritance Tax has no exemption and starts at the first dollar.  It is often collected at the County Recorder of Deeds acting as an agent for the Pennsylavnia State Department of Revenue. For an unrelated party such as a tax sale buyer the tax rate is 15% of the value of the property on the date of death of the former owner PLUS 6% annual interest.  When we sold the above propety after about 5 years of owning it the settlment company required that we escrow enough to pay the 15% inheritance tax plus 6% annual interest.

As they say all real estate is local.  We have only invested in a few states, and there are something like 3,200 counties in the US.  Each one has different economies.  We have been sucesssful renting properties in the fastest growing counties in several states and have been doing it for decades.  We have never lowered rents, sometimes rents have not increased and stayed the same.  Since Covid rents have risen sharply. Some rents have gone up 40% or more over that period.  We are full, and currently have no vacancies.  We anticipate more vacanies on the horizon, but we do not anticipating lowering rents.  We did not lower rents in 2008, and or goal is the same now. 

@Yixiong Pan Since we found out about the unrecorded Welfare lien before excess funds were distributed, we alerted the Tax Claim Bureau and they paid the Welfare lien out of the excess proceeds.  If we had not done that we would have had to pay the lien out of pocket.

@Sachin Amin  it depends, in some zoning it is cumlitive such that in commercial you can do residential, and industrial you can do anything.  But other zoning is exclusive.  i bought a property that formerly had a house there for 100 years, but the house was torn down and the property was zoned industrial.  That town made me get a varience to build a SF house there.

@Frank Chin Long time!  

@Nathan Gesner  I concur it is a useless law.  It is supposd to catch money laundering, but it exempts any company with more than 20 employees and grossing more than $5 Million.  Does that mean that money launderer never have more than 5 employees and never make $5 Million.  The law is unnecesary, redundant, and is am addront to small business.  Just as big box stores stayed open during Covid but small businesses were forced to close, this law will impede small business and force some businesses to close permanently.

an open case can mean that somebody has filed a claim.  For examle I bought a property where the owner was in a bar fight, and injured somebody.  That person filed a suit to reclaim medical costs.  Until it was adjudicated and a judge found for the plantiff, the claim was an open case.  Once the judge found for the plantiff it became a judgement and ATTACHED to that person as well as ALL assets that defendant owned including all real estate.  In practicality it attached to all real estate owned in that county, but the plantiff can refile the judgement in multiple counties where the defendant owns real estate.  Once it becomes a judgement it goeas against property.  I am not an attorney and am not giving legal advice only relating what happened with property that I bought.

David Krulac

Bigger Pockets Podcast #82