The calculation involves:Selling Price: $1,075,000Original Purchase Price: $355,000Depreciation Recapture: $105,300 (taxed at 25%)Capital Gains: Sale price minus original cost, minus depreciation, minus selling costs (~15-20% federal capital gains rate for their income bracket).State Taxes: Since the property is in California, state capital gains taxes will also apply.Given the multiple layers, I’d highly recommend your parents work with both a CPA experienced in real estate and a qualified intermediary for the 1031 if they choose that route.If you need recommendations for professionals in Illinois or California, feel free to ask!

@Martti Eckert I live in Los Angeles and have done a handful of BRRRRs in Missouri so feel free to reach out with any lending related questions to pulling off BRRRRs in Ohio. 

It’s clear you both have such a passion for serving others, and I love how that’s at the heart of your real estate goals.Your plans for 2025 and beyond are so inspiring.

Feel free to DM me. 

Building homes always comes with surprises but the best part is that our clients don't feel any of that.

This included modernizing the kitchen with high-end appliances, upgrading bathrooms with spa-like features, and adding hardwood floors for a luxury feel Lessons learned?

My husband has mixed feelings as to sell or keep.

You should invest where you feel you have a competitive advantage.

How do you think the 2 relatives will feel about having their rent raised or being required to pay rent period?

If leveraging equity feels too risky, you might consider using a portion of the equity to fund your next property while keeping reserves intact.