Hi BP community,
First time post but I have enjoyed reading and learning from others experiences. I own a 4plex in Fresno and single family home in the Bay Area and just recently sold a property that I profited 209k from. The sell of that property was for 415k total. My original plan was to take the profit and try to go to Indianapolis to purchase a couple of properties cash.
I recently found out that to defer taxes I not only needed to utilize all the profit but also replace the debt. So when finding that out I switched my strategy to purchase a portfolio of properties. In doing that I found out from my lender that the max properties I can finance are 4. So in essence for the price range of the homes I have been looking at i am not able to purchase 415k worth of homes while being limited to mortgaging only 4 homes which has left me with the following scenarios:
1) I use all profit and mortgage some properties for a total of about 350k worth of properties. This result approx to 2,500 cash flow after putting percentage aside for maintenance, vacancy, and expenses. In this case would I be taxed 65k? (415k-350k= 65k) if so, what is the tax rate? I have read it could be 30%?
2) find homes that are more expensive to add to 415k value. This is not as intriguing to me because the ROI is much lower. I understand that buying cheaper homes is way more risky but I know folks that had been able to make it work for them really well and is just more in alignment with my risk tolerance. But this may be then most logical option I have
3) I am quickly approaching 45 days and rather than rush into something just pay the damn capital gains tax. On a 209k profit what would be an estimate tax % on that?
Thank you in advance for reading and I would appreciate any feedback and perspectives.
