All Forum Posts by: Susan O.

Try these two CA links for the central valley:

https://caanet.org/local/

https://caanet.org/local/cen

Good luck...

@Susan O.

All 1031 questions are a "yes" for @Dave Foster. Remember that Yes-Man movie? Jim Carey was playing Dave.

Yes, you can combine home exclusion with 1031. The big unknown is my Q #8 - whether you can combine the two units, one with full exclusion and the other with partial. But, like Dave said, whatever is not excluded can be thrown into a 1031.

If you are doing a 1031 anyway, than I'd suggest not complicating things any further: exclude only Unit A, and 1031 the other 2 units.

I don't feel that taking some kind of deferment or forbearance is a bad thing in this current market and situation. For a beginning investor, if that's the way they get through this because a tenant stopped paying rent for one reason or another, then it's what they have to do. I don't feel that it's not "having a little dignity" when I was able to get a deferment on 2 of my loans that will allow me to have non-paying tenants move out, get them renovated, and get new tenants in there over the course of 3 months and not have to pay the mortgage payment and lose even more liquid capital. It will be interesting to see if future lenders hold this against me in Commercial Lending given everything going on with Covid-19, but if that's the case then I probably would not want to be in business with them anyway. 

@Susan O.

All 1031 questions are a "yes" for @Dave Foster. Remember that Yes-Man movie? Jim Carey was playing Dave.

Yes, you can combine home exclusion with 1031. The big unknown is my Q #8 - whether you can combine the two units, one with full exclusion and the other with partial. But, like Dave said, whatever is not excluded can be thrown into a 1031.

If you are doing a 1031 anyway, than I'd suggest not complicating things any further: exclude only Unit A, and 1031 the other 2 units.

@Susan O.

It's difficult to help you when you're not disclosing your whole situation. On another thread 2 days ago, you asked whether you could combine a homestead exemption with a 1031 exchange, and myself and @Dave Foster, among other professionals, tried to answer.

Here you just claimed that you already completed a 1031 exchange of this triplex? Was it really an exchange, meaning you had a "qualified exchange intermediary" involved? If yes, they should have answered a lot of these questions. If not, and you simply sold your triplex and then used that money to buy your new property - then you do not have a valid exchange at all.

If you do have an exchange, you can only depreciate what was left on the old property. You can also depreciate, including possibly bonus and 179, the new improvements, and cost segregation may not be necessary if you kept a good itemized accounting of the work done.

Also, your expression of "all equity and little depreciation left" does not make a lot of sense. 

In short, it sounds like you may be trying to DIY some complicated transactions without sufficient understanding of taxation, likely hurting yourself in the process. With a 22-unit costing in 7 digits, it's not wise to avoid professional help.

It’s one thing if someone absolutely needs a forbearance because they just simply cannot find a way to pay their mortgage. However, he didn’t say that was the case here. He just asked how forbearance will affect him on obtaining future investment properties.

I can pretty much guarantee a future lender is not going to look at it as a big positive if he ends up going with forbearance or getting a loan modification or any sort of loan forgiveness as you suggested.

Best case scenario is he finds a lender who doesn’t penalize him for that, but there certainly isn’t going to be a “huge benefit” when he goes shopping for his next loan and they find out he wasn’t able to make the payments on his current loan or it had to be modified or partially forgiven.

@Natalia Barriuso the fence does count for bonus depreciation and don’t forget the disposal expense for the old property.

As for the qualifications for a loan, they are referring the the reduction of taxable income you are left with after the large depreciation deduction. This happens from time to time, but you are allowed, and recommended, to push back on the underwriter. To be accurate, they must exclude depreciation from the calculation as it’s a non-cash expense and doesn’t negatively effect cash-flow. If you aren’t comfortable pushing back, you can always ask them how depreciation is treated before getting into underwriting. There are plenty of underwriters that calculate this correctly.

@Natalia Barriuso to answer your question straightforwardly, yes fencing does qualify for bonus depreciation, since it depreciates on a 15 year schedule. Although, I agree to Ashish that in order to claim these as bonus depreciation, one should perform a cost segregation in order to properly identify those assets, and claim the proper depreciation life for them.

As to @Ashish Acharya's point about not qualifying for a loan...I have not seen that be an issue, as most lenders know to add depreciation back since it is a non-cash expense. Ashish, are you seeing this as a problem?

For a comm

You cannot take section 179 on a actual the real property. 

Yes, we have seen people take this all the time. 

Most people opt for bonus depreciation rather than section 179 as sec 179 is more restrictive for most people. 

But you also have to consider your state tax implication. What I have seen is most states follow bonus depreciation but not Section 179. So if you take section 179 there will be no addback to your income when you calculate your state taxes. However if you take bonus depreciation, You would have to add back the depreciation you took because the state will not allow that deduction.

For a small taxpayer, right now on bonus and section 179 gives us similar benefit. That is 100% expense of the qualified property. Under both rules you cannot expense the entire real property.