All Forum Posts by: Jeff Nash

I 100% agree with the intent aspect and that is an important premise, but the fact is in this particular situation intent for it to be personal use has been confirmed (by way of a public post). If you opened the exchange with the intent to hold the property for investment, and then in the future circumstance changed which caused you to reconsider the use of the replacement property and convert it to personal use, then a period of time less than two years might be reasonable.  The original post leaves the door open for a challenge by the IRS, so the safe harbor of holding it for investment for two full years is the safer option.  

You can’t do an exchange and immediately move into the replacement property and use it primarily for personal use. The proceeds from the relinquished properties need to be used for investment purposes for a period of time; however, you can temporarily use it for investment purposes for 2 full years, after which you can convert it to personal use. Perhaps you could also purchase a duplex, for example, and use personal funds for the portion that you can live in and 1031 funds for the investment portion. I don’t know  the specific details of your situation, but there are other considerations and options as well.

@Chris Lane feel free to reach out.

@Stanley J Black can help.

@Jason Watson your comment above just recently came to my attention yesterday. I debated whether to even respond or chime in, but believe it is warranted as I took your commentary to be unnecessary, and I'll leave it at that. Characterizing @Denver McClure as a "strawman" is inaccurate and inappropriate.   

Based on my observation, I assume this post originated in the Tax and Legal Issues forum rather than the Classifieds. I understand the self-promotion rules and their purpose, but in this type of situation the rule is out of context and perhaps even trivial. BP personnel are supposed to otherwise redirect this type of seeking recommendation post and then whoosh …. an innocent response such as that made by @Denver McClure miraculously is within the rules. Amazing!

If you initially took the time to respond to this post as a tax professional by explaining this self-promotion technicality (as I have myself done in the past on similar posts), you could easily argue that this action alone can be construed as self-promotion, depending on your interpretation of the definition. Self-promotion to me insinuates that you are vehemently announcing that you possess some special skill or product/service that perhaps others do not, and/or you are trying to differentiate yourself to gain a competitive advantage, whether fair or unfair.

I understand that you have been on BP for a month, but probably have recognized that @Michael Plaks has long tenure and made significant contributions over many years, perhaps since inception of BP. His many articles and white papers are highly effective in addressing the myriad of repeated questions that seem to be asked one way or another by many posters. I have found myself just responding to several posts to "ask @Michael Plaks", as I highly doubt there is a topic that he has not been able to address over time. I say all this to demonstrate respect for my/our peers on BP and also to align with Michael’s sports analogy comment. I would also note that I view BP more like the NCAA, so interpret that how you may!  

I respect you and many other knowledgeable peers on here, who I know are working hard to help, albeit not entirely gratuitously (this is not Dear Abby).  Time is our value.

Glad to help Jarrod!  Making the transition from an employee to a business owner is very hard work but rewarding in the long run.  

What I meant by surrendering is taking your funds out of the annuity to be used for some other investment.  An annuity is a contract and depending on the type and company you used it has a standard term.  Each year during the annuity contract period if you decide to surrender the annuity you stand to give up and lose a certain amount.  This is a surrender charge.  Once you exceed the term you are “out of surrender” and can take the money and do as you please, annuitize, or continue accumulating based on the type of annuity you have (fixed, fixed index, variable).  You just need to verify if you are out of surrender or not and then determine if staying in the annuity is what you think is best for you based on your risk tolerance, investment objective, and time horizon.  If you want to stay with the annuity then you would need other sources of investable capital to self-direct. This could come through contributions or perhaps rollovers as applicable.  

You will be the one that takes the deduction.  Who was the Form 1098 issued to?  Were you listed first with your SS#? This matters because your tax transcript will either show it or not on your record.  If not, you will have to include an explanation as well. 

If you are out of surrender you need to assess your investment objectives in light of your risk tolerance and see if the annuity is something that you should keep or not. You just need to weigh the alternatives and evaluate the potential risk/return.  Some older annuities are not competitive and can be replaced (1035 exchange for more competitive annuities) or surrendered to invest in other asset classes such as real estate.  

Sense Financial who @Brett Synicky represents is a plan provider and very reputable.  As he noted, if you call some of the mainstream custodians they will say they allow for self-direction but they mean that in the literal sense of doing what you want with the securities and investment options on their platforms, which are traditional investments like stocks, bonds, ETFs, etc.  When a solo 401k is involved, you also do not need to use a SD custodian either (ie - checkbook control) which otherwise would be more costly.  For SD IRAs custodians are required.  

Have you already decided to surrender the annuity for its cash value and intend to self-direct?  If that is the case, you just need to get a plan set up that will allow you to do that and you can use checkbook control to invest in real estate or other alternatives.