All Forum Posts by: Brad Rondeau

Hi, I'm rehabbing my condo in Laguna Niguel CA after renting it the last 9 years.  I need about 1060 sq ft of carpet.  I may live here for several months or maybe 2 years (to get owner exclusion) and then sell.  Looking at local companies for carpet and also  big chain Empire Carpets of CA.  For decent, affordable, cost effective, basic carpet does it make sense to just stick with Home Depot.  I've noticed on other items that Home Depot usually has the best price and maybe I should not waste time shopping.   I know it always depends but just trying to find out if Home Depot is a good affordable place for carpet.  Maybe they can just beat everybody based on their size, I really don't know.  Thanks.

Hello Nicholas, thanks for your help.

My California condo has been used as a rental for the last 8 years. I will move in this month with plans to stay for 2 years. If I then sell after 2 years ($160,000 gain) - do I pay any taxes on the $160,000? I've been very confused about this. Some have told me that if I live there 2 years in the last 5, that I'm home free and the $160,000 gain will be tax free. Others say only 2 years worth (20%) of the gain will be tax free. How can I be sure which is the correct answer. Either way I guess I'll still have to pay CA taxes (9.3%?) and depreciation recapture.

I'm 59.5, divorced, and retired last year, very little income - living off savings etc. I really am not excited about moving to the condo for 2 years (miss my kids/grand-kids in the midwest). But if I could wipe out all of the capital gain it might make sense.

My California condo has been used as a rental for the last 8 years. I will move in this month with plans to stay for 2 years. If I then sell after 2 years ($160,000 gain) - do I pay any taxes on the $160,000?   I've been very confused about this.  Some have told me that if I live there 2 years in the last 5, that I'm home free and the $160,000 gain will be tax free.  Others say only 2 years worth (20%) of the gain will be tax free.  How can I be sure which is the correct answer.  Either way I guess I'll still have to pay CA taxes (9.3%?) and depreciation recapture.

I'm 59.5, divorced, and retired last year, very little income - living off savings etc.  I really am not excited about moving to the condo for 2 years (miss my kids/grand-kids in the midwest).  But if I could wipe out all of the capital gain it might make sense.

Guys thanks for the great answers.  I'm getting ready to move into the condo May 21st after tenant moves out.  I'm hoping to sell it as my own home (rather than a rental) after 2 years to keep from paying the capital gains.  Am I correct in assuming I won't have to pay capital gains on my actual gain?  I guess I will still have to pay taxes on the depreciation recapture (I have total depreciation amount over the years of about $120,000).  So would I just need to pay 15% Fed capital gains and 9.3% California tax against the $120,000?

Also when I buy the new $1,100 refrigerator, in a month or two - can that still be written off against the rental income?  Even though the rental contract is really over as of May 21?  It  will be a replacement for the  fridge that was smashed during the rental period.

My tenant in my Laguna Niguel condo is moving out after 8 years.   They have been good tenants and will probably get most or all of their deposit back.  Originally I was going to take the new Samsung refrigerator with me ($1,100+) and let them get their own.  I later asked if the wanted to rent the fridge from me for an additional $20 per month.  They  (reluctantly) agreed.  A few years later they said the ice maker stopped working and wanted it fixed.  I told them to just get Ice trays because I did not want the hassle/expense of the repair.  They said they would buy their own fridge, stop paying the fridge rental and store my fridge in the attic.  I said ok.  As they are getting ready to move out I see my once beautiful stainless steel Samsung in the Garage with a huge dent in the door.  There is also some corrosion on the metal in different spots.  

Before seeing this I was planning on putting the Samsung back with ice trays and be good to go.  After seeing it, I can't really use it now.  Does the tenant bare any responsibility here, or is this all on me?

My condo in Laguna Niguel CA is worth about $560,000. I purchased it for $365,000. I lived in it  during 2010 (while I was fixing it up) and then rented it starting in 2011. After 8 years my tenant has given notice and will move out of the condo on May 31st when the lease ends. I plan on selling the condo. As soon as the family is out, I will have new mirrored wardrobe doors, new baseboard, new paint and probably new carpet and a few other upgrades. Once completed the realtor will have pictures taken and we will get the house on the market. Including repairs, I’m hoping the condo will sell in about 75 days after tenant moves out.

Question 1. Can I add the above “repairs” to the price I paid for the condo to figure my tax basis? Or are these simply normal expenses that I can not use?  They will definitely "improve" the property.

Question 2. Assuming this condo is vacant for 75 (or more) days, can I continue to treat it as a rental while it is vacant. That is continue to write-off mortgage interest and my travel to the property etc. until it is sold?

Question 3. Related to question 1, if I can’t use the repairs to create a higher tax basis, can I treat the repairs as expenses to the rental - to write-off on 2019 taxes? Even though they will be occurring in June after the final lease has ended?

I’m basically trying to come up with the best way to continue my tax write-off for the repairs and vacancy after the May 31 lease ends – until the condo is finally sold. Maybe I should advertise it for rent at the same time that repairs, and sales listing is happening?

Thanks for your reply's.  I'm trying to find an exit strategy from all my real estate.  Below is some text from the turbotax site about reduced exclusion.  The second paragraph seems to indicate that I could shelter 125,000 of gain by moving to the condo for one year.  Is this correct (maybe I am reading it wrong)?  I realize I still will need to pay the depreciation recapture.

https://turbotax.intuit.com/tax-tips/home-ownership/tax-aspects-of-home-ownership-selling-a-home/L6tbMe3Dy

How can I qualify for a reduced exclusion?

In certain cases, you can treat part of your profit as tax-free even if you don't pass the two-out-of-five-years tests. A reduced exclusion is available if you sell your house before passing those tests because of a change of employment, or a change of health, or because of other unforeseen circumstances, such as a divorce or multiple births from a single pregnancy. So if you need to move to a bigger place to find room for the triplets, the law won't hold it against you.

Note: A reduced exclusion does NOT mean you can exclude only a portion of your profit. It means you get less than the full $250,000/$500,000 exclusion. For example, if a married couple owned and lived in their home for one year before selling it, they could exclude up to $250,000 of profit (one-half of the $500,000 because they owned and lived in the home for only one-half of the required two years).

Hello, I bought a condo in Laguna Niguel CA in December 2009 (short sale) for $365,000. Today it is worth about $550,000. In 2009/2010 I did $29,852 of improvements including interior paint, carpet, remodel kitchen/bathroom, new AC/Furnace. I lived in the condo for about a year and then rented it out for the next 8+ years. Renters just gave notice and now  I want to sell it but I’m thinking I need to move back in for a while, so I don’t get killed with taxes on the gain. I need to do new interior paint and baseboards and carpet for about $7000. So –

Paid 365,000

2009 Improvements 29,852

2019 Improvements 7,000 (estimated)

Expected commission upon sale 33,000

Cost Basis? 434,852

550,000 – 434,852 = 115,148 (I believe this is my capital gain). I’m retired now living off savings. The year that I sell the house my income will be the 115,148 plus maybe 20,000 in interest/dividends/stock gains. Would it be 20% federal capital gains tax for the sale of the condo? I will be single when the house sells and believe I can have a gain of $250,000 without paying taxes as long as it is my primary residence for the 2 years before I sell it. Here is my question. If I live in it for only one year and then sell it – would 125,000 be tax free (this is what I read somewhere – that if you live in it for a percentage of the 2 years then you get that percentage of the 250,000). I really don’t want to live in it for 2 years so 1 year would be much better as long as I can keep from paying any capital gains tax. Also does CA work the same as federal (I believe the CA state tax is over 9% and I certainly don’t want to pay 

Hello, I own a condo in Laguna Niguel CA and a 3 bedroom house in Burlington KY. Both are rentals and the tenants living in each one would like to buy from me. This would be a great way to save commission but I have never done a sale by owner. The good thing is the tenants have lived in the properties for years and know them well. Is there somewhere I can get a good generic sales contract that I could use as a model? I have googled but have not found anything good. I'm hoping I can get a good simple contract and just open escrow with a local escrow company - probably split closing costs between me and buyer. Any other issues I should know about?

Hello, I own a condo in Laguna Niguel CA and a 3 bedroom house in Burlington KY.  Both are rentals and the tenants living in each one would like to buy from me.  This would be a great way to save commission but I have never done a sale by owner.  The good thing is the tenants have lived in the properties for years and know them well.  Is there somewhere I can get a good generic sales contract that I could use as a model?  I have googled but have not found anything good.  I'm hoping I can get a good simple  contract and just open escrow with a local escrow company - probably spit closing costs between me and buyer.  Any other issues I should know about?