All Forum Posts by: Jackson Hanssen

@Eli Fazzo

Happy to jump on a call with you and walk through the 1031 process. Since the properties are in New York you have a few extra steps you need to do to keep all of your funds out of NYs hands at closing.

Here's an interesting BP thread on the South Carolina property tax issue you mentioned. https://www.biggerpockets.com/forums/725/topics/604427-south.... Would you consider investing outside of your local area? If you have three NY properties you might have enough equity to get into something commercial outside of SC.

@Jasmine Vida

It's hard to say, there is no hard and fast rule. Generally 1 to 2 years is where I've seen the bar drawn historically. A big thing the IRS looks at is intent, and renting it out for at least a year shows that you intended to use that property for investment.

Homestead exemptions are for property tax and 1031 is cap gains/income. Different things so no big cross over, but you won't be able to claim the homestead exemption while you're renting it out, because it won't be you who is living there. Though I don't see an issue to claiming the homestead exemption later on down the line.

@Brett Jurgens

I'm in agreement with @Stephen Morales. If you like the property and have that amazing rate, just heloc out enough equity for the down payment on your next purchase and start hunting for deals.

@Kevin S.

Best of luck! It's a big step but will surely move you forward in your journey for financial independence.  Feel free to message me as needed.

@Kevin S.

You can 1031 into multiple properties. no need to do 1 for 1. You can also do small changes, like going from a multi-family to a couple SFRs, or industrial to office. If you've done a cost seg before and have broken out your property into 1245 and 1250 property, it would be best to be thoughtful of your replacement property to ensure you'll get full deferral. As far as I know there isn't clear guidance on this topic from the IRS, but most professionals take a similar view as Melanie above. I think @Sean Graham would be able to help you on specifics of if your intended replacement property will have enough 1245 assets.

If you want we can hop on a call and go through all of the hurdles. requirements and timelines for a 1031. It's really important to go through everything upfront, as the timelines are pretty tight once you start, and certain mistakes will disallow the 1031 in its entirety.

You'll be fine, especially if you're using additional equity contribution to improve the property before your refinance. I'd agree it would look better to wait over a year from the exchange to refinance, but not needed.

@Pete Harper

A 721 exchange is the end of the line. Once you're into the REIT you're either going to pay taxes or die and get the step-up basis. So it really limits your flexibility. If you're still fine holding the assets directly, why not just 1031 the underperforming property back into other assets closer to home?

@Dave Foster with the great answers and insight yet again.

@Dani Beit-Or yes that reduces the exchange amount from 2.5mm to 2mm. You only roll over the 2mm, take a 500k cash out and then claim the 500k sec 121 exemption.

You can think of it like taking the 500k off the top, then the remainder functions as a normal 1031 exchange would.

Hey @Chase Leibfritz, You can't do this directly. As Chris mentioned, the taxpayer has to stay the same between the 1031s. However, you have two options to solve this. 

You can do a 1031 to a TIC (tenants in commons) with your MIL, where you will both own a proportional share in the property. This comes with some other ramifications around legal liability and the ability to get a mortgage on the property.

The other way to fix this is to create an LLC now, and both you and your MIL contribute the current properties into the LLC, then the LLC 1031 exchanges the old properties into the new property. I tend to prefer this route.

If you want to hop on a call and go over specifics I am available most of this week. I am a 1031 exchange facilitator

Dave has it spot on here. Fundamentally these two issues aren't connected.

1. Do you want to sell the current property, if so and you'll buy a new property with the proceeds than a 1031 will make sense. 

2. If you have the ability to get a great loan from your father, you might not even need to sell your first property. Take a heloc to get some cash out and then use that in conjunction with the offer from your father and buy more property.