All Forum Posts by: Victoria Hartcorn

Thank you everyone!

Thanks in advance for reading. We are selling our condo and our accountant insists that we are not exempt from capital gains.

We purchased in March 2016 and lived in it 3.5 years until it was rented out for only 18 months January 2019 to June 2020, and now we are selling.

Since we lived there 2 of the last 5 years I emailed to confirm with our accountant we will not be paying capital gains up to 500k since we are married (she is a small business specialist who does our bookkeeping, payroll, and taxes for another business monthly). She said we are misunderstanding that rule and we will pay capital gains on the time we rented it out...

So, I am very confused about what the rule even means if I am misunderstanding it. I realize we will have depreciation recapture, but living there 2 of the last 5 years sounds clear to me.

If I am right, how do I bring this back to my accountant kindly? I obviously am not qualified to discuss taxes and I upfront pay for her services for the year, so I was hoping she could handle everything for us. We will be reinvesting gains into another property, so 1031 isn't out of the question, but we were hoping not to so that we can use some of the funds for other home improvements elsewhere. 

Any knowledge or advice appreciated. Thank you!

@Julian Joseph I think there is something to say about opportunity cost. I am not a risky person so the only option I would entertain is house-hacking...after all YOU need a place to live no matter what. If you can find something in your market that negates your living expenses then you have more cash to throw at your debt and you've already begun your investing career. We are aggressively paying down debt, but in the process airbnbing our condo and managing another airbnb. It is another job, airbnb is not passive, but we are turning our liability into a cash-flowing asset so we can get into an excellent financial position as fast as possible. We also are very frugal (listen to BP money) and work a lot of side hustles. Sprint while you can. We don't get time back. We have knocked out over 30k in less than a year and we don't make a lot of money to begin with.

If the one you live in now could cash flow after accounting for all expenses/cap ex/vacancies etc then I'd move back to your previous home and rent the one you're in. If it would also just break even then I would sell that 2014 property. It's a great time to be a seller and with the capital gains exclusion you could parlay a lot more cash into something more profitable. Sure the market could continue to rise, but I personally wouldn't speculate...plus you can't hire property management when you're breaking even. There's a cost to your lifestyle, you're losing the opportunity cost leaving money in it in the meantime, as well as possibly missing out on significant tax savings. I think your personal financial position and goals should play the most into your decision making though.

Seed Capital is a company that specializes in getting as much cash out of ccs as possible for as long as possible on 0% interest (generally 18-24 months). We've used them and I have been the debt bearer with my husband having the solid credit. It was a little painful watching my stellar credit radically and quickly drop, and you must be extremely diligent about paying the minimums for the time frame. That being said Seed Capital is 3-6k for one year of them guiding you and helping you turn that credit into business credit, and even if you have no money they'll charge you their fee on one of the new credit cards they get you. 

However, I don't recommend this for you unless you intend on doing a BRRR and you have a large credit line to begin with so your overall credit load doesn't exceed 50%. You don't want a ton of inquiries at once either and that'll happen if you're opening several cards. If you had a solid plan in place (meaning speaking to a banker first to feel good about a refi) then you could get the longest 0% card you can find that you can get cash advances on. Citibank has a 21 month no interest card with no rewards so it's fairly easy to open, and you could call after receiving the card and say you have a large purchase coming up so they consider increasing your line. 10-15k isn't too large of a need in my opinion (was that how much you need?), so then it's only one card you'd have to manage and it wouldn't burden your credit report with a ton of inquiries. I'd also Airbnb my place, sell some stuff on ebay, and do every odd job possible in my free time so that I'd need less money off that card to begin with. Consider every worst case scenario. What would you do if that 21 months time frame was up and all you did was pay minimums so you still carry a balance and can't get a loan?

@Marc Cunningham & @Linda Weygant Thank you so much! I will look into these asap :) Appreciate it!

We moved here from NY a little over a year ago and while I'm back next week I'm closing a checking account with a community bank there. I'd like to move money to somewhere local where people can get to know me for future potential deals. 

We're in Littleton. Thanks in advance for suggestions!

Thanks @Bill S. and @Matt M. Very helpful insight. We actually terminated the contract yesterday only a few days after going under contract. Considering all you brought to our attention and looking into it further it wasn't a good deal to present to people. We've only been at this a couple months so every thing is a learning curve. I don't know if there's any way to delete it from the marketplace though, do you?

Hey @Bill S., thanks for looking into this because I appreciate your opinion. We used these comps - 

3138 S Akron Ct (171/sqft)

3293 S Florence CT (167/sqft)

3035 S Beeler St (178/sqft)

3131 S Chester Ct (183/sqft)

All sold within a couple months within a mile. Our local mentor taught us to average to square footage of these to come at an ARV and our realtor initially suggested higher (of course she wants to sell it, but for what it's worth we trust her opinion).

It's tougher because no house is as large (all comps are under 3000 sq ft but not more than 15% less) and it is also on the largest lot in the neighborhood. I think S Beeler is the only that sold over 500k, but there's nothing out there recent with as much square footage inside and out. How would you estimate it in this instance?

Assignment of Contract for large ranch home in Denver!

ARV is $560k with recent comps to back it up. Subject property is in a quiet cul-de-sac and has one of the largest lots in the neighborhood at .39 acres.

Estimated repair budget is <40k - mostly paint, changing the bathroom cabinetry and updating fireplaces. The sunroom would require the most work and is not counted in square footage. 

We can provide photos from our visit to the property and the comps. Please email us at [email protected] or call 720-446-9968.