All Forum Posts by: Chris L.

@Dave Foster, what about #3 above?

@Dave Foster and @Bill Exeter....Okay, so if were to postpone the sale until November then the 46thday would land in 2018 and it would be an installment sale if I hadn't found a property.  If I did find a property and couldn't purchase it , then the funds would be held for 6 months-through May/June 2018 and , again, it would be an installment sale and I wouldnt pay taxes until 2019. Correct? I really dont want to delay the sale until November though. 

#2-if I start the 1031 in August and identify properties in September but it doesnt go through then the funds are held for 6 months and into 2018 and it's an installment sale and I dont pay taxes until 2019. Correct? THat said, the intermediary will have my funds for 6months. 

#3. What if I identify properties in August and I purchase one of them and there are still funds left over but it's too late to identify more properties because it's past day 45. Then, considering the intermediary will be holding the funds into 2018, is it still considered an installment sale and I pay in 2019 or because I purchased a property in 2017 do I have to pay taxes in 2018?

@Dave Foster, I'm a bit confused. If I am unable to find an appropriate property by day 45 -or provide you a list of properties I'm interested in by then, then my funds will be returned to me immediately. Is that correct?  My understanding is that if no properties are identified by day 45 all funds will be returned immediately but if even a single property is identified-even if it doesnt work out-then I have to wait the 180 days. Is that correct?  Now...if I find a property but it doesnt work out and I have to use the 180 day period then it can be recorded as an installment sale. The only thing is that my funds are tied up with the interemediary for 180 days and I have no access to them...Is that correct?

Thank you for your reply @Dave Foster Okay,so what I think I am hearing is that if I apply for a 1031 and I am not able to find a suitable property before day 45-and I dont provide you a list of properties by day 45-then after day 45 the funds would be returned to me and I would then pay my taxes as usual in April of 2018. Is that correct?. My closing may be around the second week of August so , considering this, I imagine that I would then just pay taxes as usual in April 2018. Is that correct? I wasnt sure if the rules would be different for a rental property in an LLC that qualified as a bulk sales notice but had a 1031 applied.It seems like things remain the same.

@Jessica Zolotorofe, thank you for finding the info for me! Okay, just to make sure I understand.....If I file a 1031, the funds from the sale go into escrow with my intermediary and if the 1031 falls through and I dont wind up buying properties... the intermediary gives the funds back to me and I then pay taxes with those funds that quarter. Is that correct? I have never had to pay taxes quarterly -I just pay yearly as it's a single owner LLC with 1 rental property in it-but I suppose that I will be required to do so because the payment would have been due at closing had I not done the 1031.

@Jessica Zolotorofe, that would be great if you could find out. Thank you

THank you @Jessica Zolotorofe. One last question, what if you set up a 1031 and close and then at day 45 after closing-the deadline for finding your new real estate -you were unable to find suitable properties. Who then handles the bulk sales notice fees?  Does the intermediary that set up the 1031 with me handle the submission of funds to the govt for my taxes? How does that work?

@Jessica Zolotorofe yikes! 

That's lousy. Do they hold it in escrow in a protected place? How do I know I will get my money back? 

What if I'm undecided on whether to use a 1031. I was going to go in with the intention of using a 1031 exchange but what happens if I decide not to? Should I go into it as if I'm not doing a 1031 then have buyer submit letter and then cancel out if I use 1031. Confusing as I am not sure yet but letter has to be sent in 10 days before closing. 

@Jessica Zolotorofe, I know I will have capital gains taxes due and income taxes due on the depreciation recapture after the sale. Is this what they will be collecting in advance? I have no other outstanding taxes etc. 

I reside in NC, but my rental property is in NJ and in a NJ LLC. I am going to sell my rental and I am wondering if I will have to pay the Bulk Sales Notice or the Exit tax. Can someone please explain the bulk sales notice to me and how that works and also whether or not I will have to pay the exit tax if I am already paying the bulk sales notice.