No. of Recommendations: 3
We are buying a new house here, a lovely one on the water. We’ve been in our current place for 22 years and love it, but...

We’ve also owned a condo in Boston since 1979 and it has appreciated vastly since then. As it has been in rental since 1984 it is totally depreciated, meaning the original $65,000 purchase is essentially zero. In order to get out of the long distance landlord business we have sold it for over $1,000,000 (!) and are rolling those monies into the new house, which will also be an investment (rental) for some time, and perhaps someday our “last house.)

With a primary residence you just buy one, sell the other and the tax man lets you roll your profit forward. Since these are businesses you have to do a “1031 exchange” per IRS regulation, which are quite specific and strict. In fact, since we bought the local place first, we have to do a “Reverse 1031” which requires an independent third party to handle the monies (which we can never touch until everything is finally consummated.)

Anyway, we have a lawyer locally. We have a lawyer in Boston. We have formed an LLC as a holding company to “hold” the money away from us. We have engaged an independent firm in NJ to effect the temporary loan from the LLC to the local seller, as well as wash the proceeds from Boston before it comes to us. We will “lease” the house from the LLC until everything is final and...

If this is making your head spin, well, me too. But it’s the only way to do it without taking the enormous tax hit, which would prevent us from buying the local property. (The 1031 is a tax *deferral*, not a tax avoidance mechanism.)

The Boston property was sold without contingencies, except oops, there’s a lawsuit against the condominium association from an owner which will result in an assessment in the future. Big? Small? No one knows. The local property is a stucco house with issues, and we know nothing about stucco. So we have had two contractors out to advise, as well as a full home inspection and...

Well, it’s been busy. During which, right in the middle, my inner ear problem recurred and I have some dizzy spells from time to time. Jolly. At least there are no banks or mortgage companies in the middle making this even *more* complicated. Ah, the first world problems we endure ;)
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