All Forum Posts by: Tony T.

Thanks again for the replies, I think I'm understanding most of it. @Dave Foster, thank you for all that info!! To see if I understand, I'll make this example:

Lets say my 1031 property is selling at 1.5m and I find 3 houses for 500k as replacements. that makes each house 33% of the tax burden.

If I rent the 1st one for 2 years and live in it for 3 (5 year requirement), I'd get 60% of the 33% it represents, so that's about 20% (.60* .33) tax savings from the 1st.

Then I move into the 2nd home for 2 years which is 2/7ths (years lived in) = 29% of the 33% tax burden which is about 10% (.29*.33);

Then I move into the 3rd home for 2 years which is 2/9ths (years lived in) = 22% of the 33% tax burden which is about 7% (.22*.33).

Add 33% + 10% + 7% together and it's about 50% tax of the original tax burden ...is this looking correct?

So a better way would be to purchase a 1.5m home, rent it for 2 years and live in it for 8, would I be looking at 80% tax reduction?

Of course with inflation, I'm just going to get taxed way more, maybe even double in the next 5 years. Plus I just got divorced, so I can only do $250,000 gain exemption which I didn't think of until yesterday. I'm not liking the idea of moving so many times either, so I may to rethink all this. Maybe once or twice, I'd move?

Bill,

Thanks for that info!! I had no idea they changed the law. That changes A LOT. I guess I could buy a house in FL for 1.4m and then live in it, but I don't know if I'm willing to move away.

Another thought: How many months is required to rent out a 1031 replacement property before I can move into it and start my 2 years or residency?

More info with my situation:

(1) Apartment building is worth about $1,400,000, purchased at $700,000.

(2) Houses that I'm willing to live in run about $400,000 in my area (2 story with 2-car). I could buy all 4 if I needed to, but with the new info on the law change, I may need to scrap the idea. It's a lot of moving for less than half of the tax I thought I would save.

Complaint: My property value was only inflated over the years; its value didn't make me any profit in real (inflation adjusted) dollars. So I'm being taxed on inflation. How is that just? I shouldn't start a new topic ...sorry.

I have a small apartment building worth 1.4 million and wonder if it's possible to do a 1031 exchange for, say, 4 houses for around the same dollar amount. Then sell each one after living in each for 2 years to avoid paying capital gains and depreciation taxes.

I'm just starting to look into how 1031 exchanges work, so I'm new at it, but wanted to see if there's a flaw in that plan. I'm pretty sure it's common to live in a property for 2 years to avoid capital gains, I just wonder if there's a problem doing it after a 1031.

Thank you for any input!

I was brainstorming on this only a little bit. Is there any security you could use? Like a car? I guess if they have a loan, that wouldn't work. I also thought I should own houses or townhouses. That way if the government forbids evictions, you can always sell the house pretty easily. You can't just sell a 20 unit or 5 unit, for that matter. So instead of having a 20 unit, own 15 townhouses. Each could be sold if you get someone who refuses to pay, then just purchase another one. It's a loss, I know, but the loss may be only 50% of letting a tenant steal from you for 18 months of rent.

@Steven Westlake - Almost worthless, like $10,000

Thanks everyone! I want to point out that zoning mentioned in the listing:

"Commercial Neighborhood which permits; adult day care, bakery, business services, child care center, coffee shop/cafe,community center, crafts or artisan’s studio, emergency medical treatment center, fitness center, grocery store, library, medical or dental office, museum, offices, personal services, place of worship and much more."

Also please note that I am not looking to do any alterations to the property except trivial ones (like fixing a leak), so apartments, gymnasium, etc are not on the table.

@Joe Splitrock - Yes. That's my main thought too, the heat. I am cognizant of this becaue I have residential rentals and the cost of heat is typically considered for the bottom line when tenants are looking for a new place. 40ft. ceilings wouldn't be helpful! Thanks Joe.

@Nik Moushon - Thanks for all of your thoughts! I'm not really looking to change anything with the building. I'm just looking for an excuse to purchase this beauty. I've got money to burn, but I'm not the type that wouldn't consider a small return/profit from owning it. I almost looking at it like a toy. I'd take this as a toy over a private plane or something.

@Victor S. - Shazaam! You win the best reply for the thread!

@Kathryne Omaits - OUTSTANDING POST; thank you! I did think of the homeless shelter, but I am not looking to run something like that, just to rent it to someone who would. The future of R/E in this neighborhood is not pleasant. It's partly why it's listed for only $155k. Yes, the time comittment is the biggest hurdle. I have residential rentals and I am fortunate to spend very little time on them. So I don't think I want to change my life just to own this stunningly beautiful building. I might by it JUST to have it as a toy if I knew it's value would be maintained, but I fear it'll lose value as time goes by (in real dollars). I even play the organ a little and would love to have this building just to hear the magnificence of the space! But all the research would be a little too much for me, I suppose. I have some life changing things going on right now and will pass in about a year. I think the time to research and networking would be too big of a challenge for me.

@Nat C. - Yes, I'd check the zoning with a fine-toothed comb. I did find out the church is on the national register of historical places; that's probably going to be a big problem. I can actually do building inspections myself and I know all the trades (HVAC/plumb/elect/framing/etc). Thank you so much for the encouragement; you seem to get the non-tangeables I experience when seeing this stunningly beautiful building for such a low price that is money I can easily afford, I can wrinte a check for it for crying out loud.

@Sofia Sharkey - There is no parking lot nearby, just on-street parking in a residential 1900's townhouse section in a city where R/E isn't something you'd invest in. FYI, Im not looking to modify the building in any way, just to find a tenant to rent it as-is.

@Nicole Skorka - thank you. I do have plenty of money, I am well capitalized. I can easily write a chec for the purchase price. I also know all the trades (hvac/elect/plumb/roofing/framing/mason/etc), so maintenance isn't an issue with me.

@Joshua D. - Great Post! The negatives you list are things I am aware of but the taxes would not be a problem once I get it reassessed. The suggestions you made are exactly what I'm looking for! Indoor storage is something I never thought of.

@Joe Splitrock - I am proficient in all the trades, even pointing masonry. Nothing scares me, and the tenant would be paying for the heating of a drfty building, not me. I'm not looking to "convert" the building to anything, I just need ideas to find a tenant that might want to rent it as is.

@J. Henriquez - I don't want to run a business, just ideas on how to find a tenant, sorry if I wasn't clear.

@Dennis Wayne - $7200/yr on a $100k investment isn't all that bad - 7%. I can expect a 7-8% rate on residential rentals. In my city, almost all listings for $100-$150k sell in one day; ONE DAY. I need to find somethig to get a return on my $100k I have because with inflation, Im losing it FAST, the governement is relentless causing inflation. I'm betting my $100k cash is worth $80k from last year, prices are skyrocketing in R/E here in Harrisburg, PA. I woulsn't even mind a 5% returrn just to protect my money.

@Matt M. - Im not afraid of maintenance since I know HVAC/electrical/plumbing/masonry/etc. AND I have all the time in the world as I am retired.

@John Teachout - see Matt M response.

@Chris Szepessy - Im not looking to convert anything, just looking for a tenant idea to get around $800/month rent.

@Stephen DeThample - I'm not looking to RUN a business, just ideas for a tenant to rent the place as-is.

@Elliot Shibley - I don't think I'd want to rely on finding a brewery to have a decent return. Also, A performance venue is not going to work with no parking, I believe.

@Mark Fries - The funny thing is: I WAS a minister for a short time. I have full credentials, but it's not going to happen, l - Great Post! The negatives you list are things I am aware of but the taxes would not be a problem once I get it reassessed. The suggestions you made are exactly what I'm looking for! Indoor storage is something I never thought of.

@Dylan D. - Day Care COULD work if it's zoned ...thanks!

@George W. - The roof is the only thing that worries me with such a building. The heating would be paid by the tenant, not me. It IS on the registry of historic places, so that is a problem, probably. But I am fully proficient with plumbing/electrical/HVAC/roofing myself, so expenses in the trades do not apply to me except for materials. The tenant would car for the kitchen, not me, FYI.

@Alexander Szikla - I would never want to convert a church building to condos; the money would be insane and would cost way more than building from scratch. I'm looking for ideas to leave the building alone but find a tenant to use it. Thank you.

@Joe Splitrock