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All Forum Posts by: Robert McEachern

Robert McEachern has started 6 posts and replied 18 times.

Post: Depreciation Recapture on Land Sale Contract

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

Hi @Wayne Brooks, it is my understanding that in Oregon, the Seller has to pay 25% recapture to the federal government and 10% to the state.  The total depreciation over the 12 years of ownership is $118,000 (roughly).  So, if I'm doing that math right, it would be 25% * $118k = $29,500 plus the state recapture tax of 10% * $118k = $11,800 for a grand total of $41,300.  Is that correct??  I'm trying to figure this one out...  I have heard that the state does recapture and I have heard that it doesn't recapture.  I'm confused...

Thanks for your help.

Rob

Post: Depreciation Recapture on Land Sale Contract

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

@Brandon Hall I have no idea what a "vote" is but I'll give you one.  Thank you for the thoughtful and intelligent response.  I haven't read Brandon Turner's book but I don't understand how anyone can buy real estate with no money down.  In my particular case, the seller will have roughly $40,000 in depreciation recapture tax due in year 1.  My plan is to close the sale on January 4th, 2016 so that the seller won't have to pay that tax until April 15, 2017.  That will buy me 15.5 months to write that check.  Hopefully I can add enough value in that time and refinance...

Thanks,

Rob

Post: Depreciation Recapture on Land Sale Contract

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

Hi All:

I am buying a property on a land sale contract.  The seller will retain title.  Does the seller need to pay depreciation recapture in year 1?

Thanks,

Robbie

Post: Need Financing - 4Plex

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

Hello All:

I am purchasing my wife's aunt's 4-plex and need a lender that will carry roughly $300,000 in a first mortgage and allow the seller to carry the rest.  The property is estimated to be worth $600,000 (we will pay for an appraisal). 

The property is located in Portland, Oregon. 

Thanks for your help.

Rob

Post: Depreciation Recapture in Seller Financed Transaction

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

@Ben Leybovich @Roy N. @Brandon Hall:

Thank you all for your commentary.  Are there any other taxes that would be due in the year of the sale in this situation?  I'm trying to figure out how much I need to come to closing with to cover all of the Seller's costs (closing costs, taxes, etc.).

Thank you in advance.

Rob

Post: Depreciation Recapture in Seller Financed Transaction

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

@Brandon Hall @Roy N. Thank you both for your insights.  Just to make sure I'm understanding correctly, if there is $100,000 of depreciation recapture, the Seller owes $25,000 in federal taxes the year of the sale.  Is it taxed on the state level??  Will that be in addition to the 25%?

Post: Depreciation Recapture in Seller Financed Transaction

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

Hello All:

I am trying to purchase a 4-plex using seller financing and the Seller's accountant is telling the Seller that they need to receive enough of a down payment to cover the depreciation recapture which is taxable in the year of the sale.  Is this true?  I have never heard of this.  Is there a way for the seller to somehow defer that tax?

For reference, the terms of the transaction are:  $0 down and monthly interest only payments at 6% with the balance due in 7 years.

Thank you in advance for your help.

Rob

Post: Seller Carried Financing Question

Robert McEachernPosted
  • Rental Property Investor
  • Lake Oswego, OR
  • Posts 22
  • Votes 2

Hello All:

My wife's aunt was over for dinner last night and she (knowing that I'm a real estate broker) asked me if I would be willing to sell her 4-plex that she owns here in Portland, Oregon.  After a short discussion, I asked her if she would sell it to me to which she responded "that'd be great!"

We are going to get an appraisal to determine the value.  Once we have that number, I need to figure out how I'm going to purchase this thing.  I assume the appraised value will be between $500K-$550K and I don't have 25% of that in cash.  She has $260K in bank financing. 

My question is, can I get a seller carried note in this situation with the bank debt in place?  Are there any other forms of creative financing that I should pursue?

I appreciate your help!

Rob