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 ;)
I went through this last fall when I sold a rental. But I only had $100K in capital gains. My head was spinning just reading all the rules and that was a straight up 1031 exchange. I can't even imagine was a reverse one looks like. To err is human, but to really screw things up you need politicians.I decided to forgo all that nonsense and took the tax hit, but I did not have $1M gain so it was easy.#6
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. Totally off topic - I had a pretty severe concussion about 5 years ago. All sorts of vertigo problems. I tried the Epley maneuver. It solved my problems, at least in terms of vertigo.
I tried the Epley maneuver. That’s exactly what my PT guy does for me; I’ve had this four times in the last six or seven years. The Eply maneuver has cured it in one visit every time - except this time. Of course my regular guy wasn’t in that day and a different guy did it, but he wasn’t as “forceful” (not that there’s any actual force required )?)) but anyway I went back today and he “found” the symptom, the twitching eyeballs, and went through the routine 4 times (1 more than usual) and here I am sitting waiting for everything to normalize.Usually takes a few hours, so we’ll see. Anyway, I now have a “standing prescription” from my GP so I don’t have to jump through hoops at the worst possible time. He says “You can do it yourself, you know,” which is true I guess, but I can’t diagnose which side is giving me the trouble, and the PT can.
Interesting Goofy,Might be in the same boat soon. Be interested to hear how all of this works out for you down the road. What I didn’t understand though was the significance of an owner suing the association. As you are no longer involved, this surely would not affect you in the future? You then mentioned Stucco issues which I assume is the new place on the water and not related to the condo?Early for me, so perhaps I haven’t read this correctly.
but I can’t diagnose which side is giving me the trouble, and the PT can. I did it myself all the time. I couldn't figure out which side was the problem either. So I just did both sides. What could it hurt?, I said to myself. I got lucky. It worked really well for me. Good luck with yours.
What I didn’t understand though was the significance of an owner suing the association.It may be hard for a purchaser to get a loan on a condo if the HOA is involved in litigation.intercst
It may be hard for a purchaser to get a loan on a condo if the HOA is involved in litigation. It’s an all cash deal (both of them, actually.). He has the dough, we saw one of his bank accounts which had twice as much as needed.The problem with the steam pipe/floor happened while we were owners, so it seems reasonable that it’s our responsibility (even though we’re on the 5th flooor and the problem was on the 1st. Condominium living, heh.) Worse, it came as a surprise late in the game. (The details: we listed at $899,000. The realtor got a bidding war going, and it ended at $1,000,037. No contingencies, no inspection, no nothing, all cash. We knew, and disclosed that there was an assessment pending, which we expect to be around $5,000 or less, and so said. At the owners’ meeting, which by coincidence happened a week later, it came to light that there is a lawsuit against the association asking for damages $300,000 and now includes “lost rent’ in an unknown amount. The buyer felt a little shanghaied (reasonably, we think) so we have offered to cover the assessment, given that his bid was tens of thousands over the next bed, and over $100,000 over our ask.)Anyway, the P&S has been signed, we are going ahead. Incidentally, he has never seen the unit. He’s buying it because his daughter is going to school in Boston and it’s a two-bedroom with a double-room view of the Charles, just across the bridge from MIT and Harvard and down the street from B.U. It’s a great unit, great location, great investment. They aren’t making any more “river view” housing in Boston... He used a buyer’s agent, who apparently he trusts.Yes, the stucco is on the house *we* are buying here locally and after hiring a stucco expert he tells us that it is no big deal, the house inspector was wrong (he said he didn’t know stucco) and that what is needed is caulk around the windows and a paint job in the one section of the Florida room. Big whoop.Meanwhile it’s a constant marching band of lawyers, P&S agreements, advice from contractors, etc. I’ve already scheduled a floor refinish for the kitchen/living/dining areas. New appliances are on the way, and I have drawn up plans on what to do with the ‘mother-in-law’ apartment on the basement level. Fun times.
Wow Goofy,Congrats...sight unseen and in a bidding war and well over 100 grand on asking....that is some going...!!! I never have this kind of good fortune! What an investment. Next year or so perhaps for me.Good for you. New home also sounds good.
and I have drawn up plans on what to do with the ‘mother-in-law’ apartment on the basement level. Fun times.Whatever you do, don't install a mother in law.D
My deceaced husband who was a CCIM in real estate and taught it did a large Starker exchange of about six properties and received an award for it. I would suggest you make sure you use CCIM's in doing 1031s.
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