All Forum Posts by: Raquel D.

Ditto on talk to a CPA/attorney. I’ve heard that NV sometimes has more favorable laws when it comes to liability/asset protection. Sometimes people will form LLCs in different states because laws are more favorable for their situation. (Think of all the Delaware LLCs for none-DE companies.) California does have a gross receipts tax for any CAs formed or registered in CA. My understanding is that regardless of where an LLC is formed, it would need to registered in the state holding the real property.

I live in one of those states where marijuana is very openly used, and I will say that the smell doesn’t generally linger. It’s the plant (flowers) themselves that are really pungent, so if people don’t store it (or the used burnt bits) in a closed container, the smell from that is noticeable. Similarly while it’s being smoked it’s pretty strong — but once it’s done, the smell disappears sooner rather than later. If someone smoked pot in the rental on occasion, then the old smoke smell wouldn’t cling (unlike cigarettes, where if someone smoked a single cigarette inside, people may smell it for days). If I walk into a home and smell pot, it means someone just smoked it and/or there’s an open flower/burnt bits/ash somewhere. It wouldn’t be from, say, a joint smoked 3-4 hours earlier.

Wow, it turned out gorgeous!  And the staging is breathtaking -- I love seeing a well-staged home.

@Paul Allen I did find a lot about this 2-fold requirement when searching the web, but your comment helpfully guided me to what I really needed!  I just read the Section 121 Exclusion, and per (b)(2) (A)(1): if "either spouse meets the ownership requirements of subsection (a) with respect to such property" (emphasis added) -- with subsection (a) referring to the rule regarding residency requirements -- then the $250,000 exclusion would be replaced with $500,000.  

Also under subsection (d) special rules, per (A): 

"Property transferred to individual from spouse or former spouse In the case of an individual holding property  transferred to such individual in a transaction described in section 1041(a), the period such individual owns such property shall include the period the transferor owned the property."  

Section 1041(a) refers to interspousal transfers -- so if I'm reading this correctly, if I transferred an interest in my property to my spouse, the period he owns the property would be considered the same as the period I held the property (as the transferor).  Of course there are a lot of exceptions that would make this inapplicable -- but it looks like we'd meet all of the qualifications.  So yay!

@Vlad K. Thank you for the clearly laid out answer!  He has never owned a property and has lived here with me the entire time, so it sounds like we meet the criteria!  It's nice when tax answers can be made so succinctly :) 

Awhile back at a real estate meet up, I was talking to a guy about the Phoenix market and he said he had been investing there but was pulling out. He did mention that he had an acquaintance who was continuing to invest there, and whose niche was to target the retiree tenant. According to him, these types tenants had a tendency to rent until they either need it to move to assisted living or died in the home. His acquaintance had some tenants who had been there for 10 to 15 years. There are a lot of homes in the Phoenix area with SFHs and townhomes that are in neighborhoods with age restrictions—like 55+ communities. If I was understanding this person correctly, I think it was fine for the owner-landlord to be under 55 as long as the tenant was 55+. (Don’t quote me on that though, I’ve never looked into it myself!) If that is the case though, and you were interested in this niche, maybe homes in those age-restricted communities would be a good area to target.

My primary residence is worth almost 3x as much as what I paid for it in 2013.  I'm planning on selling in 2018 for a number of reasons, but the increase is going to leave me with a gain of around $300k.   I'm not married and therefore only $250k of that gain would be exempt from capital gains tax.  It's a good problem to have -- but I'm wondering if I can avoid it entirely.

I've been with my partner for going on 13 years, and we've intended on getting married for a long time, but just haven't really gotten around to it.  (Yes, I realize that sounds like a weak reason as I type it -- but neither of us ever wanted a wedding and being married wouldn't change much for us beyond tax filing status, so it wasn't a high priority on our list.  Going to a county courthouse is kind of like going to the DMV -- we don't want to go unless we absolutely have to.)  In hindsight, I realize taking care of this ages ago would've entirely negated this problem -- but hindsight is 20/20. 

So here's my question:  If we get married now and transfer title to the residence to both of our names, would we need to wait for him to be on title for 2 years in order to get the $500k exemption for a married couple?  If so, are there any exceptions that would shorten the period? Any arguments to be made to the IRS since he's lived here the entire time I have?   Thanks for any input! 

If you’re still paying PMI, then pay down enough to get rid of that. (Check to see if you need to request it too — sometimes no more PMI charges doesn’t happen automatically.) Other than that, chances are the interest on your mortgage is so low, you’d get a better return on many other investments. And certainly don’t let the tax tail wag the dog. Best wishes on successful investing!

I subscribed last night and listened during my commute this morning. Loved it and I’m looking forward to more episode!

I hope you have checked out BiggerPockets podcast episode 257. I thought it had invaluable guidance for out of state investing. Really sorry to hear about this sour first experience you’ve had, but I hope it becomes a lesson that will contribute to your success with your next endeavor. My personal experience with inspections is that they catch a little and miss a lot too. I bought a tiny old house in MN last fall (I also live in the Bay Area) and I took a red eye out so I could be there for the inspection. And boy, was I glad I went! Being there live win the inspector gave me 10x more info than his actual written report did. I took notes the entire time, and he told me to think about a lot of stuff that he didn’t actually put in the report — helpful things, like how much I should expect for certain repairs and what the norms are for the area. Stuff he wouldn’t actually put in writing. For example, the inspector noticed the sewage main line may have leaked in the past and he was able to ballpark the replacement cost — it was a great framework when I spoke to plumbers about it, AND I was able to use it as one of the reasons to negotiate additional seller-paid closing costs. If I had gotten just the written report, I wouldn’t have gotten that number to discuss with my realtor. The inspector also missed a lot of things — like the electrical was way worse than he’d reported, and he was off about some basement leakage issues. But because I walked through the house with him and heard his reasoning and methodology, I wasn’t upset; he pointed out enough to prepare me! The rest is just stuff I need to deal with. (Like the furnace stopping at 8pm when it’s -8 degrees out on Monday night — yikes!) Because of these experiences I’ve decided that I’m ALWAYS going to be present for inspections — or at least for my first couple dozen properties (so I learn more and can get a better team). The silver lining is that even when money is lost, there’s always experience to be gained.