All Forum Posts by: P. Kaye M.

Thanks, Dave

I appreciate the input. I posted a question in another category regarding this, also. I am hoping to start a 1031 exchange and I am wondering if I would qualify before paying the fees to set one up. My estimated basis, stepped up, is about 459K (that is 1/2 of my basis of 273.5K + 20K improvements and 1/2 the value at time of my husband's death of 585K) + 20K upgrades this year to sell. Net sale will be approximately 565K. My net sale will be about 565K. I have made an offer of $570 on a replacement property. I need to get this in place if it is doable. I know I am not doing things in the best order but things happened fast once I decided to sell...

Another question for you Dave, Is a Qualified Intermediary the same as an "Accomodater". My realtor mentioned the later that works with the local title insurance, but when the realtor spoke to her about my situation she said I needed to check with a CPA to see if my sale would qualify as a 1031 and that she is just the "accommodator" of the money as it exchanges hands. I am not sure who I should be dealing with to get all of my ducks in a row.

Hi, Dave

Could I have taken the depreciation during the last 3 years when I did not rent it? If so, I might do well to amend those tax returns and take the depreciation and expenses of maintenance and utiilities.

Thanks, Bill

I have wondered if I should have kept taking depreciation. Unfortunately, I have been guessing about a lot of things I shouldn't have been guessing about!  I assumed I couldn't depreciate it because I didn't have any income. 

Concerning the stepped up value - I think the cost basis for 1/2 of the property is stepped up and the other 1/2 is my original cost basis. I am not sure how to appropriate the improvements done before and after both the reconciliation and the death of my husband.

I have a SFR that I had rented from 2017-2020. It was rented for 3 1/2 years so I missed the opportunity to sell as my primary home. I haven’t had any rental income from it since 2021. I bought it sole owner in 2005 as a primary residence and converted it to a rental in 2017. I changed the ownership to joint tenancy with my husband in 2019. He passed away in 2022. I bought for 273K - retro appraisal for his date of death is 585K. I have done 20K in improvements + another 20K in improvements since this January to get it ready to sell. I have depreciated the house 30K during the 4 years of rental. In looking back at my tax records, I did not “abandon” the property, I just had no rent to claim the next years, in 2021 and forward. My husband and I were legally separated when I bought the home and had since reconciled and ended up with two houses. We were not allowed to file taxes jointly until we vacated the legal separation in 2021, which we did. So 2021 was the first year we jointly filed taxes and there was no rental income from either house. Will I qualify to do a 1031 since I wasn’t currently renting it out? Can the combination of rent and appreciation qualify it as being held for investment purposes or will IRS say I was not trying to rent it and deny 1031? I am intending to purchase a SFR in my town that is more suitable as a rental. I will reinvest all of the funds from the anticipated 600K sale (less 35K in selling costs).

I just listed the house for sale and expect it to sell soon.  I have identified a property I would like to buy. I have made an offer on the new property. I do not have a Q.I. yet. Any input on all of this? Appreciate this helpful forum!

Thanks, Matt

I do see where the stepped up basis will help quite a bit. Unfortunately, Oregon has a 9.9% tax rate on capital gains in addition to the federal tax. I think I will be looking at CG tax on about 120K after deducting for depreciation of about 29K but then have the recapture tax. I don't think I will be hit with the 3.8% additional tax. I believe the actual sale price of the house will be 600K but I will deduct the selling expense fees. My cost basis was originally 202K for the building plus about 30K improvements. I do wonder if I would be better off just paying the taxes and not messing with the 1031 and having a new primary home so I could sell or rent the other. I agree that I shouldn't keep it just because of the low interest rate. But I also think that if I can rent it to cover the payment and expenses, why not let someone else purchase the house for me and keep it indefinitely...Then there is the fact you mentioned about the 121 exclusion, which I would qualify for now...a bit overwhelming making these decisions so thank you for your insight.

I currently own two houses. First house is going to be on the market for sale next week. I bought it in 2005 for 273K and I am listing it for 600K. I rented it out for 4 years (2017-2021) and depreciated it during that time (29,300 depreciation). I did not want to continue to rent it out after Covid moratorium and Oregon rent control laws, so did not renew the tenant's lease. My husband and I planned to move back in and sell our other home but he got very ill and we were unable to make the move. He passed in 2022 (appraisal for that date said 525K-550K) I have been on the fence about moving back there, selling or renting. I decided to fix up (20+K expenses in the last 3 months) and have signed the realtor contract last week to sell. I intended to sell, buy a one level with the proceeds and take the capital gains hit. I own the home I will be selling. I carry a mortgage on my other home that is valued at about $480K with a 300K loan @ 2.25%. I would probably keep the other house regardless of what I do because of the low interest rate.

I am now wondering if I should hire a Qualified Intermediary (my realtor calls this an "Accomodater") so I have the option to buy a one level rental, stay where I am at, and if in the future I am unable to live in the two level home I am currently living in (our second home that is my primary residence), convert the rental to a primary residence. I assume I would lose the fee I would pay the intermediary if I do not complete the 1031. It seems like it might be in my best interest to do the 1031, buy a rental that is one level and continue where I am at for the time being, rather than buying a primary with the proceeds and taking the tax hit... Thoughts anyone, and what kind of fees would I be looking at paying the Q.I. I realize I have to intend to rent the new property in a 1031 - which I would intend to do. Also, are there other things I may not be taking into account, other than "quality of life" issues?