All Forum Posts by: Chris L.

There is a lot for sale in a well loved community and I thought of buying it and holding it or possibly building on it and selling the property. The owner is selling their home and wants to sell the lot with the home at a discount. If they are unable to sell the lot with the home they will be selling the lot by itself for about 7k over the tax value. I’m wondering how to price out the land and if it’s worth buying. The lot is about .28 acres and  has a hill so the driveway would be at the high point of the lot and if a house is built it would be at the low point of the lot so I am concerned about water. There are a few other 2 story homes (2300-2900 sq ft) built next to the lot that have the same slope though so it may be okay. The lot is also full of trees , so some of them would need to be taken down. I know that the houses around it are selling in the 330 -420 k range depending on the size of the house and the lot is being sold for about 50k. I was thinking of building and reselling. Is it more costly to build on a slope with trees to remove and are there more concerns? I have never done this before and I was wondering what the first steps would be or how to determine if it’s worth it to purchase to build. Any input would be appreciated. Thank you!

There is a lot for sale in a well loved community and I thought of buying it and holding it or possibly building on it and selling the property. The owner is selling their home and wants to sell the lot with the home at a discount. If they are unable to sell the lot with the home they will be selling the lot by itself for about 7k over the tax value. I’m wondering how to price out the land and if it’s worth buying. The lot is about .28 acres and  has a hill so the driveway would be at the high point of the lot and if a house is built it would be at the low point of the lot so I am concerned about water. There are a few other 2 story homes (2300-2900 sq ft) built next to the lot that have the same slope though so it may be okay. The lot is also full of trees , so some of them would need to be taken down. I know that the houses around it are selling in the 330 -420 k range depending on the size of the house and the lot is being sold for about 50k. I was thinking of building and reselling. Is it more costly to build on a slope with trees to remove and are there more concerns? I have never done this before and I was wondering what the first steps would be or how to determine if it’s worth it to purchase to build. Any input would be appreciated. Thank you!

@Logan Allec, my accountant adjusted the taxes but I still see the same NJ carryover loss to 2018. I’m not quite sure why that is the case.  I do see that my NJ and NC taxes due are slightly lower for each state though. I reviewed the original and adjusted tax docs and it seems the only change I can find is on the NJ 8960 -Line 5A shows a lower value by about 4K on the revised copy so there is definitely a change but that is the only place I see any difference.  I told my accountant that I still see the carryover loss and asked if he was able to deduct the loss from the cost basis. He said that he did adjust the cost basis..and that only depreciation can be adjusted, not operating cost and that my NJ cost basis is now lower.   Does this sound about right to you? 

The accountant said that NJ allows one to “adjust” the basis in the property to the extent no benefit was obtained from depreciation...you do not get to take losses from real estate to offset gains on sales of property in NJ. He said that NJ is a gross income state and the gross income is comprised of baskets..losses in one basket of income do not offset gains in another..It may be quite different in other states....

Thank you so much @Michael Plaks and @Logan Allec for the info. I greatly appreciate it. I let my accountant know theres an error and he is attempting to fix it. He said that he has to go back a number of years to determine any losses that were not allowed for NJ that can be added to basis...He stated that NJ does not allow net losses on rental properties ; however, those losses can get added to NJ basis so he said he has to go back and review all my losses over time.  I hope it doesn’t take him too long as the deadline is approaching...

Thank you so much for the info. I greatly appreciate it. I let my accountant know theres an error and he is attempting to fix it.  He said that NJ does not allow net losses on rental properties ; however, those losses can get added to NJ basis so he said he has to go back and review all my losses over time that may not have been allowed previously for NJ purposes. 

I sold my NJ rental property in 2017. I also had a passive loss for the rental property in 2017. With the sale of the rental my income was over 150k. I recognize that one can not take a passive loss if their income is over 150k; however, from what I have read, it states that if you dispose of/sell your rental that you can deduct the passive losses the year you sell. My question is this, can I deduct my passive losses that occurred in 2017 on my 2017 taxes or does it get rolled over to 2018 because my income is too high? I have heard conflicting info. My accountant is showing rental property passive losses to be rolled over to 2018 on my tax docs and I don’t think that is accurate. I reside in NC and the property is in NJ. Any input would be greatly appreciated.

I sold my NJ rental property in 2017. I also had a passive loss for the rental property in 2017. With the sale of the rental my income was over 150k. I recognize that one can not take a passive loss if their income is over 150k; however, from what I have read, it states that if you dispose of/sell your rental that you can deduct the passive losses the year you sell. My question is this, can I deduct my passive losses that occurred in 2017 on my 2017 taxes or does it get rolled over to 2018 because my income is too high?  I have heard conflicting info. My accountant is showing rental property passive losses to be rolled over to 2018 on my tax docs and I don’t think that is accurate. I reside in NC and the property is in NJ. Any input would be greatly appreciated.

A builder is going to buy my home and it says in the contract that the obligation of the buyer are not conditioned upon the issuance of written commitment from any lender, however, the buyer may close with a construction loan from a lender. This is supposed to be a cash sale with no mortgage contingency.  What are your thoughts on the buyer closing with a construction loan? Can there be problems with this or delays? 

Lets say you buy 5 properties using 1031 , when you go to sell do you have to sell them all at once?  If not, how are taxes then taken out.  Lets say the funds in the 1031 were 500k that I purchased 5 properties with them and the capital gains initially avoided was 150k. Now lets say I sell a property for 200k, will the whole 200k be taxed or will only a part of it be taxed? How Are taxes determined when the funds in the 1031 were divided up amongst 5 houses? 

@Tammer Fakhry, several 1031 folks I have spoken to have said they are not familiar with that form specifically and that I need to speak to my accountant. Then I speak to my accountant and attorney and they say I should confer with the 1031 folks with regards to the 1031 portion of the doc to make sure it's done correctly.  It's a bit frustrating. I'm just trying to understand how to fill out the doc appropriately. I may call the division of taxation on bulk sales again for input-it's just that I get several diff answers from them also as they are not familiar with the 1031 rules. Frustrating.