All Forum Posts by: Jonathan Felts

@Caity B. do you or your firm help with tax or financial help on installment sales? Do you have contact info?

@Caity B. Thank you so much for taking the time to run through this example. This was so informative and honestly more than I had every imagined!

How is basis calculated?  I bought with partners all cash for $474,000. I put down 50% ($237,000). 3yrs later I bought them out (remaining 50%) for $291,000. This was 1/2 of the appraised value of $582,000. We have depreciated every year for 5yrs.   If I sell now for $625,000, how do I figure out cost basis and potential capital gains?

@Eliott Elias taxable for capital gain or another kind of tax? Down payment and interest seem like they would be different kinds of income and taxes? 

I have a commercial property that is owned by an LLC in Pleasanton, CA. It had three members, 25%, 25% and me with 50%. I refinanced the property and bought them out earlier this year, so now I own 100% of the LLC. Does this trigger a ownership change and/or a reassessment of value and taxes?

Second part of this deal, the partners required me to close the LLC after they are bought out. Since I still have a loan on the property under the original LLC should I:

1. create a new LLC, and transfer the property over? I would owe 100% of the old and new one.

2. Dissolve the LLC and own property personally, then transfer into a new LLC?

What is the best way to do this to avoid re-assessment of taxes AND when I sell avoid the most capital gains taxes?

I am looking to sell a small commercial office condo unit (1728sf) in California. I received two offers one all cash for $609k and the other $625K with $315k down payment and then 5% owner financed over 5 years.  I was planning to 1031 with the all cash offer, but found some articles saying that selling it owner financing delays or reduces capital gains taxes?

I have a $315K loan on the property that is $1680/month. Taxes and insurance cost $550/month.  Is the owner financing a good deal since I still have a loan? Do I escape any taxes?

thank you @jordan 

@Jordan Bailey and @Greg Scott thank you for the input. Part of the deal for the partners is to close the LLC (they think liability). They are unwilling to change that. My thought was since I was majority owner and bought the rest i could transfer to myself personally without a reassessment.

I own 50% of an LLC that owns a property. My partners wanted out, so I got a loan to buy their interest (25% & 25%). Part of the deal was to close the LLC after doing so. I have a tax person and a lawyer but both are business oriented and not real-estate. I am wondering what steps, if any, to take to reduce taxes and a reassessment. The order of steps as I see it:

1. pay them out and get 100% of LLC

2. transfer property to either myself as an individual or a new LLC

3. Close old LLC that held property.

I think transfer of ownership and filing of new title triggers reassessment? Or because I owned 50% and now have 100% I am still majority owner. Or if I am 100% single member LLC and then transfer to another LLC or myself as an individual is it an ownership change. Tried reading the CA tax code on form 568 and Revenue and Taxation Code Section 62(a)(2), but its not clear to me.

@Dave Foster can you pay off other notes for existing investment properties if you use all the money or does it have to be new properties?

@Bill Exeter Here the details of my deal. I bought with partners the commercial property in 2018 for $474,000. I owned 50%. I bought out my partners earlier this year, so own the LLC that owns the property 100%. I bought them out for $291,000, which was half of market rate at that time. However the rents aren't great and its near a 2% cap. The sales price is right around $690,000 (have an offer). We have depreciated the property since we bought, $8000/year based on building only ($315,000) leaves me with $474,000 - $40,000 = $434,000 base value. I would have a 4.5% commission from the agent who is repping both sides, so $31,104.

Is my value then $690,000 - $31,104 = $658,896. Is this the value of the property I must buy?  Does buying my partners out at market rate take away from my basis at all?

Thanks Bill, this helped a lot, was hoping the cost of the loan has some offset, but thanks for clearing up!