All Forum Posts by: Jeremy Lee

I believe so but not sure regarding "fair market rent" - if I'm considered a co-owner would "fair market rent" still apply? In this case, I've taken a private loan from them for 25% ownership of the place and am paying them back monthly + interest for it... would that still be considered an "investment" on their part particularly since they are receiving interest on it? For property taxes, I think in the past couple years my dad has asked me to pay property taxes but years prior he was primarily paying. Will that cause issues?

 Thanks! And so it sounds like if we wanted to continue with the "buy more of their ownership plus whatever interest is charged" concept we are currently running with,  and it would continue to qualify as "investment" for them since they are generating the interest. Then they could just use the annual gift exemption, as I think you suggested, to gift us back as an 'indirect' means to slowly gift us the ownership.

Thanks Dave! So are you suggesting that they could do another 1031 exchange of their portion into another property and that I would sell my portion ownership and apply it towards that same property where we are TIC (same as current situation)? In doing so they would maintain their ownership in the property as being "investment" (and thus tax deferred) while it would still be considered primary residence for myself and thus qualifying for the home gain exclusion per section 121?

Sort of a 'rinse and repeat' scenario in terms of what we did originally with the current condo? I believe my dad is reporting everything as income (thus as an "investment"), and we have certainly lived here for at least 2 years.

Thanks, we are considering moving *before* 2 years for one major reason: possibly getting our kid enrolled in a dual-immersion program at a specific school district when he first enters Kindergarten (which would be next year 2020).

Anyway, the appreciation on the current place actually wouldn't be all that significant relatively speaking. I calculated capital gains taxes to be somewhere in the ballpark of $8k - by no means is that a *small* amount but it's not significantly huge either. So I guess the other option would be to suck it up and pay the $8k at the end of the day and if we need to move before 2 years. But as I had mentioned initially, preferably it would be great to avoid the taxation all together. 

Thanks guys - good points... So it may not work out as planned. 

What if I were to relinquish (gift) my portion ownership to my parents, then they 1031 the entire thing into another property and gift it back to us after X years? 

Ah, so the 75% gifted share may still be considered "income-generating" property for whatever the holding period is determined to be? How and when would a gifted portion of income-generating property change to "primary residence" though?

 Thanks - unfamiliar with "bifurcation" but what exactly does that mean or what implications does it have?

Likely towards the end of this year or sometime in 2020. I believe my parents would also need to "gift" it to us before we sell, as well? 

Hey all,

I was curious about tax implications regarding the condo I live in (primary residence since 2007) that I co-own with my parents (1031 exchange). They had a prior property that they 1031ed into this condo (and also put in some of their own money I believe) and we agreed to 75% (them) /25% (me) co-ownership situation. I put a small downpayment in and took a private loan (for the 25% ownership) from them that I'm paying back w/ interest and somehow we structured it to count as income for them produced by this same property... I don't recall all the details around that.

A couple questions/scenarios to confirm:

1) They are wanting to pass the property on and have encouraged us to look for another place - they would like to transfer their ownership to us, which I assume means gifting. In this case, would the gift of their ownership (mixture of 1031 funds and other) be able to be counted towards both the annual and lifetime gift tax exemptions for them so that they wouldn't be taxed on any of it? 

2) Assuming the first part is OK, and since this presumably counts as our primary residence per section 121 ($500k of home gain exclusions for married couples), when we go to sell (and then buy a new home that's either the same value of the sale proceeds or more), will we have a full exclusion on the capital gains from the sale?

Hey all,

My in-laws are retiring from their restaurant business and we are starting to help them look over their current assets/liabilities and see what they should probably dump or downsize on. They own a 1 acre lot of land in Lancaster, CA (right across from the General William Fox airfield) that they purchased for $106k back in 2006 and they went in on it with 3 of their friends on it for four way equal ownership AFAIK. We have tried to get them to look into getting rid of it but it doesn't seem like something that would be very desirable. The entire area around the airfield is undeveloped and I have no idea if/when anything will ever pop up there. They are 73 and entering retirement, and to me this looks more like a liability than it does an asset, especially when co-owning it with three other people. 

Any suggestions on what can/should be done here? And on that note, are there any commercial brokers in the Lancaster (CA) area specializing in industrial use lots? It would be good to hook them up with someone who could potentially help them (and even their friends) get out of this. I'm not quite sure what they were thinking buying this land - maybe that it was a potential gold mine while the bubble was on the rise?

The last (and only that we are aware of) communication/interest they have received about this was in 2017 from a commercial RE group who offered $55k for the entire lot of land.