All Forum Posts by: Matt Jamieson

Quote from @David M.:

@Matt Jamieson If I understand what you are asking, I do not believe so.  You can't use the sec121 exemption twice in the same 2 year period.  of course, consult with a professional, but recommend starting here https://www.irs.gov/taxtopics/tc701

As mentioned, you still have to pay the depreciation unrecapture.

Good luck.

 Understood, thank you David!

Quote from @Ash Hegde:

I believe this would work, though you would have to pay tax on depreciation recapture on the one that was a rental for two years. No capital gain though. 

 Understood, thank you Ash!

Hi All!

Google Search came back with, "When does capital gains tax not apply? If you have lived in a home as your primary residence for two out of the five years preceding the home's sale, the IRS lets you exempt $250,000 in profit, or $500,000 if married and filing jointly, from capital gains taxes. The two years do not necessarily need to be consecutive."

Question: If we purchase a new primary residence and convert current primary into rental, then would we (married couple filing jointly), be able to sell BOTH homes capital gains tax free on up to $500,000 profit each?  After the 2+ years in the 2nd home in this example.  

Example Summary...

Property A: Primary Residence from July 2020 - April 2024.  (Bought for just over $400k now worth around $600,000 )  Converted into Rental in April 2024. 

Property B: Primary Residence from May 2024 - June 2026.  Cosmetic fixer upper, potential to build $100K-$150K equity between 2024 and 2026 (assuming market stays exactly the same with no increase or decrease in market pricing).

June 2026: Listing both properties for sale and (if they sell at desired price points) seeing potentially 300K-400K profit (Between both locations) that we would not need to pay capital gains tax on.

In any case, my wife and I are looking into this as next investment, but wanted to put on this forum to see what you all think? 

All feedback welcome, we are hungry to learn and to hear what has worked for others in this current market.

Thank you in advance!

I’ve added these to my podcast list and will check them out.  Thanks Giuseppe!

I drive a lot for my job, and always trying to understand where the real estate market has been, where it is currently and where it may be going.  

The Podcast show list that I follow regularly is... (In no particular order)...

*BiggerPockets Real Estate Podcast

*Creating Wealth Show with Jason Hartman

*Get Rich Education with Keith Weinhold

*BiggerPockets On The Market Podcast

*One Rental at a Time with Michael Zuber

*Real Estate Strategies Podcast with Ken McElroy

*Rich Dad Radio Show with Robert Kiyosaki

*The Real Estate Guys Radio Show

*The Rebel Capitalist Show with George Gammon 

Are there any other Real Estate Market Podcasts, or economy related information that is helpful for real estate investors, out there that I should add to the list and listen to while I'm driving for work?  

Is there any podcast that specifically focuses on Florida real estate?  Or possibly anything specific to the Orlando area real estate?  I also invest in SW Michigan and any podcasts specific to that area would be great as well!

Looks like a great win, nice work Matt!  

Quote from @Joe Villeneuve:

So you have a property worth (maybe) $165k that you paid $106,500 for it.  That means as a rental, if you got $100/month, or $12k/year in cash flow from it, it will take you almost 9 years to break even.  OUCH!!!

Some of the details didn’t come through on the original post.  But, using your math and comparing it to current numbers on this property, it would take about that many years (or more) to make back 100% of my cash purely from cash flow.  This would not include mortgage pay down or appreciation.  Is this what you mean?  

Quote from @Joe Villeneuve:

Sounds like it was a bad deal from the start.  Why are you paying down anything with your own cash?  It doesn't save you money, it just costs you to do that.  If this was a positive CF property, the tenant was doing that for you for free.  Now you're the one paying for it

The rent does cover HELOC and Mortgage payments. The HELOC has doubled this past year or so, due to variable rate, but fortunately the rent still covers costs at the moment. Definitely a learning for me. Thanks!

Quote from @Joe Villeneuve:

Refinancing isn't getting your cash back out.  You're just paying for it now.

Good point.  Would you consider it getting cash back if the rent comfortably covers the payment after the cash out refinance?  If not, what would be an example of getting cash back?  Selling?  Or getting paid back on monthly cash flow?  Or other?  Thanks again for your reply.  

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $130,000
Cash invested: $106,500

4BR 2.5BATH Single Family Home (1760 square feet)

What made you interested in investing in this type of deal?

Additional BR from prior home. Good location. Affordable price, in a neighborhood of significantly higher priced homes.

How did you find this deal and how did you negotiate it?

MLS. List price was $165,000, after offer and negotiations we agreed to sale price of $130,000.

How did you finance this deal?

30 year conventional mortgage. Used funds from prior cash out refinance at another property for the down payment.

How did you add value to the deal?

Fenced in the backyard, New Furnace and AC, New flooring throughout, Bathrooms fully updated, Kitchen fully updated, and other cosmetic updates throughout.

What was the outcome?

We moved from this home to Florida for a new work opportunity. Kept this property as a rental and tenants have occupied it since that time.

Lessons learned? Challenges?

Connected with two contractors that helped on many of the projects that I was not able to do. This was the most extensive renovation we've completed so far. Challenge was completing all the projects only on nights/weekends, or when we had funds for contractors. Learning about the limited resource of TIME.