All Forum Posts by: Raquel D.

If it’s not in the Florida statutes then it would likely be determined by case law (i.e., what local county/state courts have previously ruled in similar cases)

I’m not a tax person or qualified to give tax advice. But as a lay-person I will say I think you might qualify for the exclusion for owner occupants with respect to capital gains tax though. If you’ve lived in the property as your primary residence for 2 of the last 5 years, then if you’re unmarried you’re exempt from capital gains tax for up to 250k of the profit, and $500k if you’re married. (So if you’re married and you net less than $500k, no capital gains tax would be due. Also I’m pretty sure that’s calculated on net profit, so broker fees, etc. reduce the taxable gain). If you owe capital gains tax, I’ve heard it’s somewhere in the 30%-38% range in the higher-ish brackets for CA residents but again. Not a tax person so that should definitely be checked. With your assets and income, I hope you have a good CPA. If so, your CPA should be able to really guide you through a tax analysis! Regarding paying off your debts... that really is up to you. You could use the money to buy more properties to create more cash flow (and the mortgages on your rentals would just continue to be slowly paid off). But if you want to wipe your hands of the time/effort of acquiring properties, that is your call. You could also do non real estate investments that may offer a higher ROR. You’ve been really great in putting yourself in the position to have so many great options. Congrats to you!! I hope you’re super proud of your successes :)

I LOVE THIS POST!!!! Thank you for sharing all this awesomeness. It’s so inspiring!

I assume you mean buy both sides of the townhome? If so, then that would be the same principle as living in one side of the duplex and renting out the other side. I’m not sure what the technical differences are between a townhome and a duplex but as long as you’re living in and renting units, it’s househacking. I will say for local listings, usually when I see a townhome, it’s referring to buying one unit, and a listing for a duplex refers to buying the whole building (both sides). I also don’t think having the HOA would make a difference, as long as the HOA allows renters. Some HOAs require owner occupancy or only permit a certain % of units to be rented. (My very limited personal experience is that HOAs are a pain, over priced, and overly restrictive so I’d prefer to avoid them. But whether you CAN rent units if there’s an HOA is a different question.)

The mortgage or no mortgage on a primary home question is debated constantly and the truth is: there IS not right answer. Just the right for you answer. Why does your wife want a free and clear house? It’s important to understand her reason — her true, deep down reason — in order to make the best decision for both of you together. I used to focus on paying off my home mortgage early because my family’s money situation was not totally stable when I was growing up, and then my dad lost his house after the last crash. I felt like paying off my home early was smart because I’d always be safe. It was a Ric Edelman book that changed my perspective.. it was The Truth About Money or Ordinary People, Extraordinary Wealth, but basically it addresses the fear behind carrying a mortgage, and how it goes back generations to what was happening in the Great Depression era. Reading it made me address my belief and determine if it was based on logic and reasoning or on fear of uncertainty. In order to decide what you two will do together, it’s important to understand the reasoning. After stripping it down to its core, you two should be able to come up with something mutually agreeable and beneficial. You two BOTH feeling good about what you decide is more important than whether it’s “wrong” or “right” to pay off your home.

Different lenders may give different options. If your mom owned part of the property and passed away, then how it was distributed would depend on her estate plan. She should talk to an attorney about that, who could advise on how to hold title. joint tenancy with eight of survivorship means it all goes to you. Some states have beneficiary deeds. She could put it in her will/trust and leave any interest in the property (with encumbrances) “off the top” to you. I’m assuming she’s own an interest in the property too as I say this though — if it’s just she’d owe on the debt then her estate would owe it and it could make siblings unhappy if part of their share of inheritance goes to pay off a loan on a property you own. There’s a lot of ways to structure and plan it.

It seems like the legal fees incurred to do the 1031 exchange would be greater than the actual tax on a $40k gain...

I’m wondering if there might be some kind of consumer advocacy program in your state that might be able to give you more tailored advice on what to do, ideally at low/no cost. Actually here’s a thought ... a big consumer advocate is Clark Howard, he has a website (Clark dot com) and a really interesting radio show/podcast. He has a free call in service open during weekdays so even if you don’t get him (on his radio show), you get a staff member who may be able to give you guidance. On the website, there should be some call in info listed. He handles situations like this all the time on his show so it may be helpful. Can’t hurt if it’s free.

It wasn’t wrong, it was just another strategy. The thing about a HELOC is that once you have it, you can do whatever you want with the cash. You can cash out to buy 100 pairs of designer shoes if you wanted (but gosh please don’t). The HELOC qualification process is just like a mortgage. They’ll underwrite the loan, get an appraisal on the property, and then tell you the amount of the HELOC for which you’re eligible. Once it closes, you can access the cash at any time for any reason. I have a HELOC on my primary residence and since I got it through the bank I use for my personal checking/savings accounts, I paid no closing costs. Then the HELOC line shows up when I log into my bank, and I can transfer cash from the HELOC to my checking account and use the funds immediately. The interest rate was also pretty low — 2.99% the first year, 4.99% after that. In other words, as long as you still qualify for the HELOC, you can still get it now — and you could even use it to acquire ANOTHER property if you wanted! (But do bear in mind, you’ll have another “mortgage” payment due on any funds you use from the HELOC.) Some lenders don’t want cash for down payments to come from HELOC funds, but some are ok with it. I went through this last year — I applied with 3 lenders, all with similar interest rates, but I went with the one that let me pull some of my down payment out of my HELOC because it was easier than liquidating a couple of mutual funds I had. (I’m glad I didn’t liquidate them too, because they’ve continued to increase in value).

Agreeing with all the “flip the car” replies. Don’t take out a loan on a car you could just re-sell immediately for a profit. (And don’t take out loans on guaranteed-to-depreciate assets!) But congrats on the car opportunity. It’s nice to find deals anywhere! Even if it sells for a little less, it’s money in your pocket (without having a debt to repay on it).