All Forum Posts by: Daria B.

Quote from @Bill B.:

@Daria B. it sounds like you were the seller, you have the credit, and you did a 1031. If that’s correct, here’s my non-expert opinion. 

You lowered the amount you had/have to buy with your exchange. (You only have to buy as much as you net from the sale, this lowered your n.) 

You reduced the amount of untaxed capital gains you’re carrying forward but you didn’t create an expense or a deduction today. I BELIEVE this credit would be treated just like covering buyer’s closing costs. 

Certainly talk to your CPA or your 1031 QI, both of which should have had a 10 second explanation at the tip of their tongue. But that’s how I would expect it to play out. 

Correct. The sale happened last year. I was the seller doing a 1031x and it lowered the net sale.

I didn’t realize the closing statement items were handled a different way and not included on the SchE. It’s all good now and this was just a question since it related to repairs but ended up being a seller credit instead of my coming out my pocket to do repairs. I guess had there been time I could have done it to assure it would be a deductible on SchE rather than a closing (basis) side of the house.

Thx!

Quote from @Dominic Mazzarella:

Quote from @Daria B.:

Quote from @Dominic Mazzarella:

Quote from @Daria B.:

Hi

Repairs were going to be paid for before closing, as the seller having some other time sensitive activities needing to be met, my agent and I decided to grant a seller credit to the buyer for these repairs. Otherwise the hold up of the sale and going back-and-forth we wanted to avoid.

Because it’s now on the closing statement, are these a deductible repair expense like it would have been had it been before closing that would normally just be under schedule E as a repair expense.

Cheers.

Since the seller credit is now part of the closing statement, it’s generally treated as an adjustment to the purchase price rather than a direct repair expense. That means it likely wouldn’t be deductible under Schedule E the same way an out-of-pocket repair before closing would have been. Instead, it could impact your cost basis in the property, which would affect depreciation and future tax calculations. Has the property closed?

Yes, last year and that’s all over with now. I thought about this when I was getting all my documents together for this years taxes.

Impact cost basis, how may I ask?

Since the credit was applied at closing, it likely reduced the buyer’s cost basis rather than being deductible as a repair expense. Essentially, instead of being able to write it off immediately, it lowers the purchase price for tax purposes, meaning depreciation will be calculated on a slightly lower amount over time. If you’re still sorting through your taxes, it might be worth running it by your accountant.

 Ok, I get it. And that’s fine it’s not like I will out live the depreciation. I did out live the one I exchanged and one reason why I did an exchange.  Even though we want a higher amount write off for depreciation but I get it.

Quote from @Dominic Mazzarella:

Quote from @Daria B.:

Hi

Repairs were going to be paid for before closing, as the seller having some other time sensitive activities needing to be met, my agent and I decided to grant a seller credit to the buyer for these repairs. Otherwise the hold up of the sale and going back-and-forth we wanted to avoid.

Because it’s now on the closing statement, are these a deductible repair expense like it would have been had it been before closing that would normally just be under schedule E as a repair expense.

Cheers.

Since the seller credit is now part of the closing statement, it’s generally treated as an adjustment to the purchase price rather than a direct repair expense. That means it likely wouldn’t be deductible under Schedule E the same way an out-of-pocket repair before closing would have been. Instead, it could impact your cost basis in the property, which would affect depreciation and future tax calculations. Has the property closed?

Yes, last year and that’s all over with now. I thought about this when I was getting all my documents together for this years taxes.

Impact cost basis, how may I ask?

Hi

Repairs were going to be paid for before closing, as the seller having some other time sensitive activities needing to be met, my agent and I decided to grant a seller credit to the buyer for these repairs. Otherwise the hold up of the sale and going back-and-forth we wanted to avoid.

Because it’s now on the closing statement, are these a deductible repair expense like it would have been had it been before closing that would normally just be under schedule E as a repair expense.

Cheers.

Hi Brett,

I understand checkbook IRA but that was not what I was referring to. I was never interested in that feature so I don't know if my custodian offers it or not. The latter part of my post was referring to the protection of the account, not the assets through funding but the cash left on-hand.

I think because banks are or were typically used for ck, savings, etc, I never looked to them as offering IRA/SDIRA.

When I opened my account (2018) it was with specifics in mind and now I am reevaluating. It has definetly been a good choice from what I was doing.

Cheers...

Quote from @Jonathan Chan:

I used my Mom's to help her retire by becoming a lender on real estate projects, but curious to see how others are leveraging their SDIRA. 

 Hi Jonathan,

I set up my SDIRA years ago for the purpose of purchasing notes and have since used it for lending and doing land trust investments. I do have a JV (joint venture) partner that I do all this through. I do not hold any actual real estate because I did not want to be concerned with being less fluid. I have rental property not associated with the SDIRA and for me it's much easier to manage.

Cheers..

Quote from @Kelly Taylor:

Hello! Looking for advice and suggestions for a Roth IRA Custodian

I'm looking to roll over a traditional IRA to a Self-directed Roth by the end of the year, and use that for my investing. I had a long conversation with Equity Trust today, and I'm almost ready to move forward with them, but upon further investigation they seem to have some pretty negative reviews. Has anyone here used them for a Roth? Any feedback positive or negative would be appreciated!
Or suggestions for other companies that provide a similar service? Seems like the Roth is the way to go - I want to choose the right partner!
TIA all!

 Hi Kelly,

I am currently with Equity Trust not by choice since they bought out Midland Trust last year (2023). Midland had my accounts both ROTH and IRA for several years. My investments were all what they termed private placement and was essentially funds used for lending, buying notes and recently land trust.

After MIdland sprun this on us, my spouse also has accounts, I did some research but didn't see a purpose to remove our accounts at the time.

I have not been with ET long enough to give comment on them and what little "issues" occured were technical. I do not know how they are handling new customers verse the Midland existing customers.

Regarding the customer service it seems the people I dealt with are still employed and only my "personal rep" as it were, was promoted and another took her place. So I do deal with one person or at least have that person I can email or call. When I had any questions they responded quickly or as reasonably quickly as they could. Mostly it was when I wanted to fund an investment. I learned enough (in summary) what they needed to do their job in getting my funding to make it easier on myself. They worked with me and had no issues explaining the steps and documents they needed from me. I would hope the ET if none are from Midland also do the same.

I am now on quest to learn the pros/cons of and SDIRA under a bank vs a trust company custodian. When I did open my SDIRA back when, I had done a lot of research but I guess I missed the understanding or knowledge of banks also having SDIRAs. Since they (banks) have FDIC protection and these other "trust" custodian do not I am now looking at how to protect what we have. No one recommended a bank at the time for the SDIRA, it was only trust companies as the custodian.

Cheers.

I don’t know if this is unheard of but my relinquished property listed and was under contract in the same 1st week of July-2024 and sold 25th of July. My replacement property was found in the first week of August-2024 and closed on the 26th of August.

I was already talking to my agent for the relinquished property months before to plan this out. And my agent for the replacement was already my property manager for my other rentals so I used their realtor service. Luckily these two individuals, separate states and realtor companies, had everything working and running smoothly including my title and exchange company. I started looking at property areas long before selling and then went out more aggressively when the relinquished went under contract.

The exchange company I used was @Dave Foster (The 1031x Investor and Exchange Resource Group) and the title company for both relinquished and replacement was @Tom Gimer of Eastern Title & Settlement. I wanted to have the same title company for the entire process and was fortunate to find ETS as they would know from the beginning everything about the exchange and the parties involved and were licensed in both states where the sale and purchase transactions occurred.

My initial conversations with Dave still left me with questions but only those that I did not know what to ask having not gotten to the different phases of this entire process.

Dave was great because not only did he answer my emails, he made sure he put the right “exchange” person in touch with me depending on what was happening at the time. I also received an email of “next steps” that I appreciated and kept me “in the know” of what I needed to do and when, if anything.

There were at least 4 maybe 5 individuals on Dave’s team that handled numerous things like; getting any necessary info from me and the title company, providing my account statement (proof of funds) for the sellers of my replacement, working with ERG for the exchange documents I needed to sign for both closings, and getting the 45-day form filled out and sent back to ERG. This was a well oiled machine with not a day going by that emails were not answered. I was also appreciative of Dave’s patience and exacting answers to any questions and was clear to me he has more than perfected his craft.

The title company had a portal that collected all the documents and laid everything out in phases that I could log in at any time to see progress.

As one who is extremely organized I felt I was in a safe space and knew any issues would be addressed. And yes, there were problems but mostly on the buyers side for the relinquished property that was ultimately handled by my agent. Also, for those dealing with an HOA, make sure you put the right HOA contact in contact with the title company. There was an issue with them and I am still waiting for that to resolve - but it's in the works.

The state where the relinquished property was, as of this writing, still has not recorded the deed - 2 months now after closing the county is dragging this out. The title company can’t close this out until they get a recorded deed since other things rely on it to actually say “yes this is done”. Fortunately, the state where my replacement property is located recorded the deed within a week of closing.

I would definitely recommend both of these companies because they really took care of me during the entire process to make sure this was a success.

Cheers!

Quote from @Chris Seveney:

@Daria B.

The maximum allowable non-judicial foreclosure fee for Fannie Mae in Alabama is $1,900, as of January 1, 2023.

Again does not include filing costs etc but assume $3,000

We have foreclosed multiple times in Alabama - it’s an easy state to foreclose in.

Thanks Chris good to know. As I get read more info I may ask for an attorney recommendation. I want to discuss with my JV first to share some thoughts on this. His comment on costs was $4k-$6k but I have no idea what that includes and I think it was a guess having no foreclosure experience in AL.

Do you have any good web sites I can read about the process or anything else not immediately obvious? And any pointers you can offer.

Daria

We don’t have an attorney yet, which is why I wanted to know in general what a schedule of fees would amount to. I realize all attorneys differ and it could be hourly or flat but I want to do some research before hand.

The plan is to sell as I have no interest in keeping it so there won’t be any repairs, if any, until the redemption period is over. But as I understand it AL has a 1-year redemption. I don’t think this is the borrower homestead since the records have a different owner address than the physical address.

This is confusing because we aren’t buying a foreclosed property, we would be foreclosing to take possession. I read that if a buyer is buying a foreclosed property in AL, the redeemer has to pay that buyer the cost of what they purchased the property for in addition to repairs and other costs.