Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 02-20-2019, 01:34 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
ExFlyBoy5's Avatar
 
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
Quote:
Originally Posted by Offgrid Organic Farmer View Post
I was in Kosovo in support of KFOR exchanging fire with Serbian Christian Forces and I was approaching my retirement. I was not capable of managing the property myself.

After I retired, we returned stateside and we moved into one of the apartments. One of the tenants was a couple girls, who had not paid rent for a long time, they had been exchanging 'services' instead of paying rent.

That was nearly 20 years ago. Some details of what happened may be fading from my memory.
Gotcha. I still have a KFOR squadron T-shirt from a deployment that I wear on occasion...it's one of the best t-shirts I have ever owned! Any chance you ever took a C-130 down range from Ramstein during that time (ran shuttles to Camp Novo, Prizen, Pristinia and a couple of other places)? If so, chances are pretty good it was the deployed squadron that did it. Small world, eh?
__________________
FIRE'd in 2014 @ 40 Years Old
Professional Retiree
ExFlyBoy5 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-20-2019, 01:41 PM   #22
Full time employment: Posting here.
Offgrid Organic Farmer's Avatar
 
Join Date: Feb 2018
Location: An Un-Organized Township of Maine
Posts: 801
Quote:
Originally Posted by Jerry1 View Post
Then go find your next CPA. Since you always use a CPA to do your taxes, you should be in the market right about now. This will be a good conversation for you to have with them.
I skipped eight years without owning any apartments.

In 2016 I bought another property. This time I had a law firm and an accounting firm, both advising me. We formed two LLCs, one LLC owns my farm, and the other LLC owns my apartment building. Everything I am doing now is being done with these guys in tow.

I do not plan to bounce around between states or countries anymore.

In 2016, as we were shopping for a law firm and accounting firm to combine together in our future investments, we were trying to put together an L3C corporation [a 'low-profit limited liability' or for-profit non-profit corporation]. My wife still insists that we had everything together as the laws of this state layout for an L3C corporation. But the lawyers and accountants are not comfortable doing that kind of thing.

We were able to talk them into an LLC that can roughly accomplish the same thing as an L3C.
__________________
Retired at 42 and I have been enjoying retirement for 18 years [so far].
Offgrid Organic Farmer is offline   Reply With Quote
Old 02-20-2019, 01:50 PM   #23
Moderator
Jerry1's Avatar
 
Join Date: Nov 2014
Posts: 9,100
Quote:
Originally Posted by Offgrid Organic Farmer View Post
I skipped eight years without owning any apartments.

In 2016 I bought another property. This time I had a law firm and an accounting firm, both advising me. We formed two LLCs, one LLC owns my farm, and the other LLC owns my apartment building. Everything I am doing now is being done with these guys in tow.

I do not plan to bounce around between states or countries anymore.

In 2016, as we were shopping for a law firm and accounting firm to combine together in our future investments, we were trying to put together an L3C corporation [a 'low-profit limited liability' or for-profit non-profit corporation]. My wife still insists that we had everything together as the laws of this state layout for an L3C corporation. But the lawyers and accountants are not comfortable doing that kind of thing.

We were able to talk them into an LLC that can roughly accomplish the same thing as an L3C.
So do you have an attorney and or CPA or not? If not, get one. Discuss basis with them.

Personally, as a CPA, it causes me concern when you seem to not want to take their advice (note your comments on the L3C). You might as well do your taxes and your legal work on your own. Not much point in paying someone if you're not going to take their advice. It seems more like you would try to convince them that your scenario in your original post is correct rather than listen and learn from them. Oh well. To each their own.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
Jerry1 is offline   Reply With Quote
Old 02-20-2019, 03:39 PM   #24
Full time employment: Posting here.
Offgrid Organic Farmer's Avatar
 
Join Date: Feb 2018
Location: An Un-Organized Township of Maine
Posts: 801
Quote:
Originally Posted by Jerry1 View Post
So do you have an attorney and or CPA or not? If not, get one. Discuss basis with them.

Personally, as a CPA, it causes me concern when you seem to not want to take their advice (note your comments on the L3C). You might as well do your taxes and your legal work on your own. Not much point in paying someone if you're not going to take their advice. It seems more like you would try to convince them that your scenario in your original post is correct rather than listen and learn from them. Oh well. To each their own.
I have a local law firm handling our LLC and a local accounting firm doing our taxes.

We really wanted to start an L3C, but they refused. So we figured out a way to operate an LLC as if it were an L3C. I do not see how I am not taking their advice. I did not start an L3C.
__________________
Retired at 42 and I have been enjoying retirement for 18 years [so far].
Offgrid Organic Farmer is offline   Reply With Quote
Old 02-20-2019, 03:47 PM   #25
Moderator
Jerry1's Avatar
 
Join Date: Nov 2014
Posts: 9,100
Great. I stand corrected. Please go discuss this scenario with them. Then, unfortunately, you may have to go to the other forum and mia copa. But at least you will be doing it from a better place.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
Jerry1 is offline   Reply With Quote
Old 02-20-2019, 03:52 PM   #26
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 1,955
Last 1031 exchange I did we had ~6 months to close on the replacement property... nothing close to 3 years.
Spock is offline   Reply With Quote
Old 02-20-2019, 05:57 PM   #27
Thinks s/he gets paid by the post
NYEXPAT's Avatar
 
Join Date: Jul 2009
Location: Miraflores,Peru
Posts: 1,992
Quote:
Originally Posted by Offgrid Organic Farmer View Post
I was in Kosovo in support of KFOR exchanging fire with Serbian Christian Forces and I was approaching my retirement. I was not capable of managing the property myself.

After I retired, we returned stateside and we moved into one of the apartments. One of the tenants was a couple girls, who had not paid rent for a long time, they had been exchanging 'services' instead of paying rent.

That was nearly 20 years ago. Some details of what happened may be fading from my memory.
How did your CPA value that and did your wife find out?
NYEXPAT is offline   Reply With Quote
Old 02-20-2019, 06:09 PM   #28
Full time employment: Posting here.
Offgrid Organic Farmer's Avatar
 
Join Date: Feb 2018
Location: An Un-Organized Township of Maine
Posts: 801
Quote:
Originally Posted by NYEXPAT View Post
How did your CPA value that and did your wife find out?
I think they documented it and paid taxes as if rent had been paid all along.

My wife learned about them before I did. She actually arrived in the states a couple weeks before I did.
__________________
Retired at 42 and I have been enjoying retirement for 18 years [so far].
Offgrid Organic Farmer is offline   Reply With Quote
Old 02-20-2019, 09:21 PM   #29
Thinks s/he gets paid by the post
 
Join Date: Sep 2014
Location: The Great Wide Open
Posts: 3,789
The money you took out during refinancing is tax free; I have used the procedure twice. However, your taxes are based on the capital gain; the price you sold it minus the price you paid (The Basis), however depreciation lowers your Basis each year you own it. Yes, a 1031 exchange allows you to roll your depreciation adjusted basis over into the new property deferring the tax until later. The time is 180 days to complete the transaction, and not 3 years.


https://www.ipx1031.com/updates-and-impacts-for-2018/
Winemaker is offline   Reply With Quote
Old 02-20-2019, 10:06 PM   #30
Moderator
Jerry1's Avatar
 
Join Date: Nov 2014
Posts: 9,100
Quote:
Originally Posted by NYEXPAT View Post
How did your CPA value that and did your wife find out?
NYEXPAT,
I thought the same thing, but I guess the apartment he's referring to isn't one he owned at the time.
__________________
Every day when I open my eyes now it feels like a Saturday - David Gray
Jerry1 is offline   Reply With Quote
Old 02-22-2019, 04:28 PM   #31
Full time employment: Posting here.
 
Join Date: Dec 2016
Posts: 572
I think you need a really good attorney and really good accountant. And most of all, you need to listen to them.

1033 Exchange:
Quote:
A section 1033 exchange applies when you lose property through a casualty, theft or condemnation, and realize gain from the insurance or condemnation proceeds. If your tax advisor says that you will realize gain from the insurance or condemnation proceeds, you may be able to defer that gain using a 1033 exchange.
1031 Exchange:
Quote:
No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment, if such real property is exchanged solely for real property of like-kind which is to be held either for productive use in a trade or business or for investment.
The initial $100K that you reinvested was actually a Capital Gain and not "income" as you call it. When you sold your first property, you should have paid capital gains tax on the $100K profit as well as tax on the recaptured depreciation that you had claimed while you owned the property. Instead of paying taxes, you waited 2 years to reinvest your Capital Gains into another property in a non-compliant '1033 Exchange'(?!).

In real life, your property would not begin to qualify for a 1033 Exchange anyway since it was not subject to casualty, theft or condemnation.

In real life, you would need to do a 1031 Exchange, which would have required you to reinvest the entire $200K sale proceeds into a new similar property of equal or higher value to qualify for the Capital Gains deferral. That would also have required you to identify the property you want to exchange within 45 days of the sale of the first property; and for you to complete the purchase within 180 days of the sale. Since you did none of these things, you are liable for the capital gains tax on the $100K profit and the tax on recaptured depreciation in the tax year the sale occurred.

Since you have done this 4X, you are potentially liable for four times the amount of taxes plus penalties - it could be a lot of money.

And regarding the $120K re-fi; if you used that $120K loan proceeds for yourself, then you should have been paying taxes each year on the loan payments that the property paid for you. It's income to you. (It's the same as if your business pays you a salary and you use it to pay the personal loan - you can't avoid the taxes either way.) This is another area of potential tax liability for you. OTOH, if you used the $120K for improving the property, then it would simply be a business expense. I'm sure there was a little of both each year, which is why you need a good accountant.

It seems like you're making up your own Tax Code as you go along. That's a recipe for disaster and you'd be well advised to seek professional help, and make an offer to the IRS to minimize your liability. FWIW, I would hire an accountant who used to work for the IRS if I knew I'd have to negotiate with them. I'm amazed the auditors didn't catch any of this. I've been told they're not always the sharpest tools in the box.
Starsky is offline   Reply With Quote
Old 02-22-2019, 04:44 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,263
Quote:
Originally Posted by Starsky View Post
....It seems like you're making up your own Tax Code as you go along. ....
That has been a recurring theme in his posts over the past year or so... but it is all blessed by his CPAs and lawyers and I think the Pope too, so no worries.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Owning and managing Real Estate jIMOh Young Dreamers 17 11-25-2014 08:34 AM
The REAL Real Estate Appreciation Rate honobob FIRE and Money 158 06-21-2009 08:46 AM
Real Estate Agent in Down Real Estate Market TromboneAl Other topics 4 06-09-2007 10:20 AM

» Quick Links

 
All times are GMT -6. The time now is 05:08 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.