All Forum Posts by: Skyler Massey

The waterline from the meter to one of my rental properties eroded and caused a little sink hole on a city access road that passes by my property. The property was vacant and we didn't know about the leak until a neighbor's  enclosed trailer was damaged when they tried to pull it down the road. 

The city told the trailer owner to contact us since it was our leaking pipe that caused the damage to the road. We don't own the road or the property where the damage occurred. I'm trying to figure out if we have any liability to help cover the damage for the trailer owner. It sounds like the trailer axel was bent among other things. 

I called my insurance company and they wouldn't give me an opinion until I filed a claim. I don't want to file a claim if I don't have any liability though. 

To potentially complicate the matter, we have since sold the home and cancelled the insurance policy. The damage occurred a little before we sold the home, and we hadn't heard anything from the trailer owner for several weeks. As such, we figured the trailer owner had taken care of the damage.

Does anyone know if I have any liability for the damage that occurred to the trailer? 

Any help and advice would be much appreciated. Thanks!

Thanks for the help @Dave Foster, @Bob B., and @John-David Herlihy! I'm just trying to determine whether I should offer seller financing or not. 

It looks like my basis in the property I'm selling is about $67k -- $47 basis from 1031 property + 20k cash to buy new place (if I'm doing that right). So if I understand correctly, I'd most likely have a capital gain of $38k (105-67) that I would have to pay over 10 years. In addition, I'd have to pay taxes at my ordinary rate on the interest I receive from the note. Does that sound right?

So maybe I'm over simplifying, but I'd have to recapture about $1,500 of depreciation in 2018 at 25%. I'd have to pay 3,800 of cap gains per year for 10 years. And I'd have to pay my ordinary rate on interest every year for 10 years (about $1,700).

Does it look like I'm missing anything major?

I'm trying to find out the tax implications of a seller finance I'm considering. We just bought a home a few weeks using primarily 1031 money from a home we just sold. We bought this home as a rental but found out that the HOA won't to allow us to rent. As such, we're considering selling it using seller financing. Here are the details:

• We bought a house in February 2017 for $58,000.
• We rented it for a year and then sold it in March 2018 for $109,000. We did about $8k of rehab.
• We put $52k related to the deal in a qualified intermediary for a 1031.
• We pulled the $52k out and bought anther investment home with cash for $72,500 last month.
• The HOA won't let us rent it, so we're looking at selling the home.
• We essentially entered into a contract to sell the home at $105k but with this deal, we'd have to owner finance it.
• Terms:
  • Sells price $105k
  • Down: $5k
  • Interest 7%
  • 10 year term
• I'm trying to figure out the tax implications of this transaction. Most importantly (i think), I'm trying to determine if my holding period would begin with the purchase of the $58k home we bought last year, or if it would change to the home we bought last month. I assume this would create a big difference on my tax liability since it would be cap gain vs ordinary income. Maybe I'm way off.
• I understand the interest would be ordinary income, but I'm trying to figure out how the gain from the two different properties would be handled. One home would have only been owned for a couple months and the other just over a year.

Any help would be very much appreciated.