[TimeForChange]

We are moving to TV in August and full time. We are selling our current home and are debt free. I also have a rental house with quite a bit of equity if I sell the capital gains tax is a lot. If I do a 1031 transfer I would like to find a partner to go co-owner with me for another TV house or Villa for rent. My transfer has to be for resi or commerical propery. Anyone interested? I am willing to invest $100,000 or more in the property we buy and do not want to have a mortgage. All of this (of course) would have to go through a contract by an attorney. We would then split the monthly rental or divide base on the persons investment.

[Joaniesmom]

One of my concerns about your proposed deal is that, if you ever wanted out of the arrangement, your partner would have to come up with another $200k or more to buy you out or you would have to find yet another person with $200k or more to purchase your portion of the business arrangement. All this is assuming your business partner agreed to the buyout.

Buyouts can be messy deals IMHO

Have a nice long chat with both your financial adviser and your attorney before you enter into anything like this.

Joaniesmom

[jane032657]

My husband, the CPA, says there are things to consider here. The advantage is for the person wanting the tax break, there could or could not be any advantage for the person going in with them. And then the other questions begin: what type of renters; what happens if something goes wrong with the place- who pays or what if one person does not have the funds to share in the repairs; you do not know the person you are joining up with on this venture; if it goes vacant, you have the monthly fees to share; hard to say what other issues come up. Not necessarily negative, just lots of factors to consider. Could be a great experience for someone. Or not.

[mrfixit]

........

....In my humble opinion......I would NEVER get in a RE deal with friends or family.

..If you are NEAR retirement age... ( based on your age or current portfolio )...

.....I would pay the 25% tax on the "depreciation re-capture"..(...or less IF you have a GOOD tax Attorney...)...
.AND...the 15% Long term capital gains tax......
.............................then put the remaining CASH in my hand.

... do not forget......the Long term capital gain tax WILL increase to 20% in 2013.

This is based on the MY notion that the economy is NOT going to get better before 2014...-...if even then.

.....Just my 1.3 cents ( after taxes ).......nothing more.......

[Joaniesmom]

Thanks to the other posters for their excellent advice. To be honest, I thought this board might not be a good place to discuss all those unpleasant details with timeforchange, but you are both perfectly correct and right to mention them here. I was hoping that the "long chat with the financial planner and attorney" would bring out what you mentioned and possibly more. And to call buyouts messy deals is one of the more egregious understatements! They remind me of divorces!

timeforchange, none of us want you to feel we are in any way criticizing you or perhaps making fun of your plan. We just want to help you avoid making a decision at a time in your/our life that might cause you financial harm. Check it out with trusted advisers. You'll be (really) glad you did.

Best of luck on your investments and your new life here in The Villages.

[TimeForChange]

Thanks to everyone for your advice. I am talking with my CPA and advisor this week and we will probably just sell the rental property here in Atlanta and take our lumps on the Capital Gains tax. After all cash is king.

[jane032657]

Originally Posted by timeforchange

Thanks to everyone for your advice. I am talking with my CPA and advisor this week and we will probably just sell the rental property here in Atlanta and take our lumps on the Capital Gains tax. After all cash is king.

My husband (CPA) says probably a better decision for your life to not have a rental but not necessarily for your taxes. He had a lot of questions, I am sure your CPA will too! Good luck!

[Rebel Pirate]

Originally Posted by timeforchange

We are moving to TV in August and full time. We are selling our current home and are debt free. I also have a rental house with quite a bit of equity if I sell the capital gains tax is a lot. If I do a 1031 transfer I would like to find a partner to go co-owner with me for another TV house or Villa for rent. My transfer has to be for resi or commerical propery. Anyone interested? I am willing to invest $100,000 or more in the property we buy and do not want to have a mortgage. All of this (of course) would have to go through a contract by an attorney. We would then split the monthly rental or divide base on the persons investment.

You wouldn't be able to move here this August if you did it...but...you could sell (relinquish) your rental property, buy a new (replacement) property at TV, rent it for a year, then move into your replacement property after you've treated it for a year (or more) as an income-producing property. If you do this, you don't pay the capital gains tax.