All Forum Posts by: Mike H.

Mike -- have you thought about renting a home in East Atlanta for a year or two instead of buying a residence?

It might make a lot of sense in the current economic environment, maybe even more sense if you see yourself moving in ~2 years based on school district.

I always advise anyone who will listen...clients, family, friends...to rent the first year or two in a new city.  Take time to get to know all of the neighborhoods and find one that resonates with you.  This is especially true with Atlanta.  Each neighborhood and OTP suburb has it's own vibe, restaurants, etc.

Best of luck.

I don't think that the 300-400k homes make good rentals in the Atlanta market from a cash flow perspective long term.  I would rather be in 3 150k homes, instead.

Honestly, your best bet will be to chase homes that need significant work in a neighborhood you want to be in.  You'll get a decent discount to retail, since most owner occupants want a finished product, and many flippers are pulling back since they can't get funding.

Very well said @Kevin Hill. Down here in Maryland we expect the same thing come November (ish). I agree, as most flips take 6 months to complete, I would NOT want to be wrapping up a flip in November.

Maryland has quite a bit of cushioning from the massive amount of federal contracting. DC takes all the tax payer money across 50 states and pours it all across Maryland and Virginia... 

Originally posted by @Alexander Felice

I heard real estate values can only go up! ;) ;)

Haha right? It goes up 3% a year no matter what I heard... (s)

For three tax returns (fed, state, local), a MFJ couple with three rentals, that fee is reasonable for a NYC metro based firm, even assuming you take the standard deduction instead of itemizing, have no dependents, and no other activity other than the rentals and W-2s.  If you have dependents (i.e. child tax credits, childcare expense credits analysis and reporting) and/or other activity (brokerage accounts, K-1s, etc), that fee is very reasonable for a NYC metro firm.

Can you DIY?  Sure, but how much is your time worth to you?  If you spend enough time reading online, you'll probably be able to get your return materially correct.  Might be worth it.  Might not.  The only one that knows for sure is you.

Good luck.

Dave, in your usual unmitigated enthusiasm for 1031s, you overlooked this statement from Mike: "our family is considering buying a lakehouse together"
Someone else pointed out this problem earlier, not sure if Mike paid attention.

 Yes sir.  Was paying attention.  I don't think the lakehouse would qualify for a 1031.  We don't really plan on renting it out.  And brother, wife, father would all be going in on it.  

@Mike H.

The unforeseen circumstances section of the tax code was intended to apply to those owners who had to sell within their first two years of ownership.  These owners would have been able to meet the two years of ownership and occupancy tests if it were not for unforseen circumstances.  This section of the tax code also provides a pro-rata mechanism for applying a reduced capital gains exclusion to the period of time less than two years of ownership if the sale forced by unforseen circumstances qualifies.  

@Mike H., I'll let the accountants here speak to it but doubt if that would fly.  There is an unforeseen circumstances clause but the IRS isn't much for the "unforeseen circumstances" argument.  Especially in this instance where the argument would be "it was your choice to sell" when you did.  You moved out 3 years ago.  That's going to be a tough case to make.  Something to hope for but not to plan on.  

@Mike H., You've got some outs here.  It just remains to be seen what plays out.  If you sell before 9/10 you'll get the primary residence exemption and get the first $500K in profit tax free.  If you sell after 9/10 you can do a 1031 and defer all tax on gain and depreciation recapture.  And if the gain is more than $500K and you sell before 9/10 you can actually do both - take the $500K tax free and 1031 the rest.

The plan for the lake house is summed up in your last sentence - you'd be purchasing solely for personal use and not investment use.  So that would not qualify.  But if you were to buy a lake house to be used for investment and treated it like an investment that would qualify - even if you used it some for personal use.  A short term rental that you use some personally would qualify for 1031.