calmloki
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
We've been doing rental real estate for decades and it has been good to us. Now both over 70, no kids, and the 36 mostly one bedroom apartments aren't really what I want to spend my remaining time dealing with. Our biggest and best building, 16 units, keeps having offers in the $1.25 million range. We've owned it for about 20 years, taking depreciation every year, and it looks like the taxes on a sale in that range would be based on an even million in capital gains and depreciation recapture.. Gal and I own jointly and file separately, so it looks like we could be looking at taxes based on $650-$700k each in one year.
We live very modestly, have no debt, and our lives are pretty much based on not being wasteful and optimizing. Our taxes are substantial, our social security income after paying the medicare income adjustment is in the $700 range total.
Looking for a way to avoid as much of the tax for as long as possible. (no - really? shocked I say!)
A 1031 means trading a known residential rental for an unknown and keeping the onus of management/care - or taking on a bigger place and a bunch of debt and managing a manager.
A 1031 into a triple-Net commercial rental avoids the care, but seems problematic in this vacant storefront Covid era.
Delaware Statutory Trust? An unknown, though I know a few on this board have them. Think you are kind of trapped in them and at the whim of the managers.
Opportunity Zone Funds? Think we've missed the ability to shelter 5% for holding an OZ fund for 7 years as Dec. 2026 is an end point. Still possible to avoid tax on 10% of the invested capital gains and all of the gains on the investment if held for ten years. How to find a good fund though? My understanding is most of the funds are set up by entrepreneurs seeking funds rather than experienced real estate builders/managers. One fund manager is quoted as saying something like;"OZ funds are like high school sex - lots of talking about it, but not many doing it". "The Mooch", Scaramucci, is into Opportunity Zones through SkyBridge Capital. Doesn't fill me with confidence we would still have our lunch money after playing in that game.
Wurra wurra. We would like to avoid giving a third or more of our gains to the taxman at sale time. We'd like to have some annual return and/or have the money grow. We'd like to do a TOD to whatever heirs we choose and have them get a stepped up basis. Right now though? deer in the headlights.
Can any of you weigh in with what you have done or with suggestions of things (or companies) you would recommend?
Gracias
We live very modestly, have no debt, and our lives are pretty much based on not being wasteful and optimizing. Our taxes are substantial, our social security income after paying the medicare income adjustment is in the $700 range total.
Looking for a way to avoid as much of the tax for as long as possible. (no - really? shocked I say!)
A 1031 means trading a known residential rental for an unknown and keeping the onus of management/care - or taking on a bigger place and a bunch of debt and managing a manager.
A 1031 into a triple-Net commercial rental avoids the care, but seems problematic in this vacant storefront Covid era.
Delaware Statutory Trust? An unknown, though I know a few on this board have them. Think you are kind of trapped in them and at the whim of the managers.
Opportunity Zone Funds? Think we've missed the ability to shelter 5% for holding an OZ fund for 7 years as Dec. 2026 is an end point. Still possible to avoid tax on 10% of the invested capital gains and all of the gains on the investment if held for ten years. How to find a good fund though? My understanding is most of the funds are set up by entrepreneurs seeking funds rather than experienced real estate builders/managers. One fund manager is quoted as saying something like;"OZ funds are like high school sex - lots of talking about it, but not many doing it". "The Mooch", Scaramucci, is into Opportunity Zones through SkyBridge Capital. Doesn't fill me with confidence we would still have our lunch money after playing in that game.
Wurra wurra. We would like to avoid giving a third or more of our gains to the taxman at sale time. We'd like to have some annual return and/or have the money grow. We'd like to do a TOD to whatever heirs we choose and have them get a stepped up basis. Right now though? deer in the headlights.
Can any of you weigh in with what you have done or with suggestions of things (or companies) you would recommend?
Gracias