All Forum Posts by: Matt Leber

Hi BP community, I have a unique homestead tax question. I did a 1031 exchange a couple years ago and traded a rental duplex into a single family home that we rented out near the beach. After 2 years, my family’s circumstances changed and we decided to move into the house by the coast and make it our primary. When we moved to the new primary, we kept our old primary and converted it to a rental.

In the first couple years of owning the rental near the coast, we did not homestead it, because we had not yet made it our primary. During 2023 tax assessment the house assessment jumped up to market value, causing a large increase in property taxes in 2023 (2x). We expected this, as we were still under homestead at our old residence at the time.

After we moved into the coastal house, we filed for homestead to be ported from the old house to the new house for 2024. I was curious so I started researching how the tax savings carry over and it appears that it would result in my taxes going down significantly in 2024. My main question is, will the tax go back down if it was already increased during those first years of owning the house as a rental? Or do taxes not usually go backwards?

Here’s my calculations:

Old house market value: 331,386

Old house tax assessed value: 209,848

Old house homestead tax benefit: 121,538

2023 New house market value: 513,600

2023 New house tax assessed value: 513,600

Ported tax benefit from old house: -121,538

Homestead: -50,000

New house assessed value w homestead: 342,062

2023 tax value before homestead: 513,600

Millage rate: 12.3655

Ad valorem tax: 6,350.92

Non ad valorem tax: 838.34

Total 2023 Property tax bill: 7,189.27

(Estimated) 2024 tax value w HS (+3%): 352,323.86

Millage rate: 12.3655

Ad valorem: 4,356.66

Non ad valorem: 838.34

(Estimated) 2024 Property Tax bill: 5,195.01

Savings of about $2k after porting my homestead exemption to the new house. Is this how portability savings work? Or am I misunderstanding something here?

Thanks. Sorry for the lengthy post on a complicated property tax question.

Hello BP community. I am in the process of opening a Home Equity Line of Credit on one of my long term rental investment properties. The closing costs are going to be about 1% of the line of credit value. Since this is opened on a rental property, can I deduct it from my rental property income on my taxes? Thanks!

Hello BP,

I’m a long term rental property investor who just listened to a recent podcast episode that go me thinking more about cost segregation. I haven’t done one in the past but have 7 rentals. I am trying to understand if it may be worthwhile to do a cost seg based on my 2022 transactions. I am not a real estate professional and neither is my spouse. We both work w2s.

2022: sold 2 duplexes in Jacksonville and 1031x into 2 single family homes in Ocala (around 200k each) and 1 single family home in Melbourne FL (650k). All 3 newly acquired SFH are long term rental properties. The home in Melbourne FL may become a primary residence at some point in the future if family circumstances change.

Would it make sense to get a cost segregation study on the 3 homes acquired in 2022? Or not worth it due to purchase price/1031/not being a real estate professional status/cost of the seg study? Thanks!

Does anyone have a good HVAC guy they recommend in Ocala FL? I have a rental that might need a new system due to its age. Thanks!

@Brian Salazar I sold my stuff in Jacksonville. Wanted to get into better neighborhoods. Ocala has been good so far! But I would be open to investing in Jacksonville again in the future.

@Cory Melious I use Facebook marketplace too but I respond to each inquiry with a blast of 5-10 yes or no pre screening questions. From there, only a subset of folks answer the pre screening questions. I take a look at the answers, and let those who answered know if they are a good fit or not. Those who are a good fit get offered a showing at an open house, of which only a subset attend. Those who attend a showing or voice that they want an application get my full application. Only a subset of those folks return the application in full. Usually by then I have whittled it down to a few qualified applicants, who I can screen further.

@Angel Wu I am closed two single family homes in April in Ocala FL that about meet that. One was 100% turn key, the other one has a little bit of work but nothing major (luxury vinyl plank, paint). I found both of them FSBO, and I think that allowed me more chance to win the purchase as I was able to talk with the seller a give them a little bit over ask. Once inspections were done we were able to come back down closer to ask. The FSBOs I think were getting less visibility on market.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $165,000
Cash invested: $41,250

Second single family buy and hold rental purchased in Ocala in last month. 1031 exchanged my older buildings in Jacksonville for something newer with less impending capex and high quality tenant pool. This 3/2 house in Ocala Park Estates should rent for $1500+ with very little cosmetic updating.

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

Wanted to improve the mix of my portfolio to include some newer (1980+) buildings and better tenant pool

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

FSBO

How did you finance this deal?

1031 exchange for downpayment with conventional loan

Purchased two single family homes in Ocala as part of my 1031 exchange sale.  This 3/2 house was purchased for $165K in Ocala Park Estates and should rent for $1500-1600 with minor cosmetics.  I wanted to trade out of my 1950's, high-capex duplex in Jacksonville and improve the quality of renter and newer building for the long run.  This Ocala house should help me accomplish this goal.

Update on the screening process. We listed it the day we closed, on a Friday, for $50 more than I originally anticipated. We accepted a well qualified applicant by Monday. By the end of the weekend, there were over 5,000 clicks on the house and over 250 inquiries (I used FB marketplace). I had 6 people submit full applications to me, and 5 were people from out of state moving to Florida. I think that tells you a lot about how many folks are moving to Florida. And it’s happening at a time when supply is very light for both purchasing homes and renting homes.