All Forum Posts by: Faith K.

Answers to the questions posed: 

First question: I'm not sure how the 'redemption' would be structured but would appreciate advice.  In this scenario, Investor B would be the managing partner and would ultimately want to have long-term ownership.  Investor A would want to meet a certain level of return but would want to have an exit strategy. 

Second question: It would be a new partnership (LLC) that was formed for a new construction apartment building.

I have heard two different opinions recently regarding depreciation recapture taxes in a partnership. Let's say Investor A is part of an LLC with Investor B that owns an apartment building. Investor A is assigned the depreciation (because Investor A has owned some apartment buildings for 30 years and can't claim any more depreciation on them). After 10 years, the project is refinanced and Investor B redeems Investor A's ownership in the property. Are the depreciation recapture taxes due at that time?

Or if Investor B owns the property for another 20 years and then sells the property, are depreciation recapture taxes then due at the time of sale for both the portion assigned to Investor A in the first 10 years and then for the remaining 17.5 years? 

What exactly triggers the depreciation recapture taxes?  Exiting a partnership or a sale? Any experience or knowledge on this topic would be much appreciated! 

Although several people touted the S Minneapolis triplex as I good choice for an owner occupant, it seems that investors are raising the prices. A friend tried to buy a duplex for several months this year but was getting outbid by investors. He finally got one that was open to only FHA buyers first. I don't know who is out overpaying around here, but it seems like a rent to price ratio of 0.5 - 1.0% is common for anything on the MLS.