All Forum Posts by: Raj Saxena

Hi everyone , we have decided to go a different route with the office building sale proceeds .

Thanks for your participation on this thread

We have a signed contract on a rental office building, closing is scheduled for April 2nd 2018, is it too late to look into 1031 Exchange ?

Are DST properties usually priced 10 - 15% higher than comparable Non 1031 properties ?

We do want hands off commercial investment, but are apprehensive about their inflated management & hidden fees which will eat into the returns.

I understand if one does not want any real estate related related responsibilities, then you cannot control the costs.  Do the DSTs disclose how much they charge or the transactions are non transparent ?

How does one decide which DST to use ? Each one of them have a flashy website

One can invest in the Public REITS, but will not get much diversification from the stocks & bonds & presently have low yields.

I understand the step up in basis for the heirs after we pass away, but at some time in the future(in old age) if we decide to not do 1031 Exchange anymore, I suppose we will have to pay the Cap Gain Taxes, only it will be a much larger sum as all the carried over proceeds will be taxed. 

We are new to this, initially we built the office for ourselves to use, but after retirement is presently rented .

OR

Keep it simple (KISS), pay about 120k in taxes (pay forward) and then invest the net proceeds of S 600k .  

What do you think of  investing into Real Estate Crowdfunding ?

I know not a single question above by any means, but these are the questions we are faced with with no clear answers.

Thanks in advance for your opinion/experience if you have passed thru this route before, 

What would you do.

Our best regards

Thank you Guys

Thank You, I appreciate your replies

I own & manage a Rental Office Building & have a LLC to manage all related affairs.

Can my LLC open a Individual 401k for retirement savings ??

Thanks

Jeff, thanks for your reply,

I may be wrong but I understood the Recapture Tax rate will be at ordinary income rate, with a Max of 25%, which ever is lower. 

As our Max income tax I suppose will be around 20%, then the recapture Tax rate will be the same.

Best

My mistake -

$ 500000 - $49500 = 450,500 Net after Taxes paid.

How are the other calculations ?  Anybody ?

My mistake -

$ 500000 - $49500 = 450,500 Net after Taxes paid.

How are the other calculations ?  Anybody ?

Sale of Rental Office Building -

want to eyeball these calculations -

We are retired now, & our annual taxable income is 50k from the rental building & another 75 k from Investment Portfolio (Dividends + Cap gains).
We file a Joint Tax Return on $125 k income

We built a Rental Office Building in 1999 for 450k, we have taken Depreciation (No Land Cost) totalling about 210K, let us suppose the proceeds after we sell the building - selling transaction costs are 500k.

I am assuming the following, please correct me if I am wrong -

Adjusted Cost Basis = 450 - 210 = 240 K

Depreciation Recapture = 210 k (500k - 240k ) at 20% = $42000
Capital Gains = 50k (500k - 450k) at 15% = $7500



Total taxes owed = $42000 + $7500 = $49500

$500k (Net Proceeds) - $49500 (Taxes) = $ 455,000 Net after Taxes paid

Am I going wrong ??