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View Full Version : Non car?- Rental property trade instead of selling


Pantera
08-16-2004, 03:51 PM
I have some home rental properties that are killing me as I just can't seem to get a decent renter that will take care of the house with out destroying it. I have owned them since the 60's & early 70's. As I understand it if I just sell them then I have to give the tax man a huge part of the proffit since I have totally depreciated them over the years on my tax returns. That coupled with the purchace price of under 20 grand on some of them makes my profit on them a huge amount.

I just can't see giving the IRS over 1/2 of my profit. I bought my first house for $6800 and now it might bring $70,000. One time I had two couples fighting in the front yard over which one was going to get to rent it.

These houses were intended to be my retirement which is coming up quick, but I can't keep anyone in the dam things that will pay the rent anymore. Nothing but flakes lately and I am getting tired of having to mow them and keep them up with out being able to rent them with out so much hassle. I seem to wast all of my time just cleaning up the crap that they leave when they move or when I throw them out.

I want to trade them for some commerical property. I have had so much better luck with my old car lot property. Same renter for the last 14 years. They helped pay off the note on it in fact. The income off it is nice and they are always doing something to keep it up or making it better if I will just pay for the supplies.

I know they are not always any better than a rental house but at least when you get one they usually will stay for years instead of just a few months (6) They also have a vested interest in keeping the place up and looking nice.

A friend of mine that collects cars, uses his to rent the front 2/3's out and then keeps his rougher cars that he has waiting to restore in the back 1/3 of the building. Gives him a income to make the payments and security for his cars too. Now that seem's like a plan to me.

Does anyone have any knowledge on doing something like this?
Any help would be appreciated.
http://www.yenko.net/ubbthreads/images/graemlins/dunno.gif

Belair62
08-16-2004, 04:47 PM
Sounds like your friend is the guy to talk to !!!

TMagda
08-16-2004, 05:09 PM
Pantera,

I'm not really up to date on tax code right now but there used to be a provision that allowed for gain deferral on a like kind asset exchange. I believe income producing real property could be converted into another type of income producing real property without triggering the gain. The catch is that it had to be a trade as opposed to a sell and buy. Ask your tax guy about a like kind exchange or check this out.
http://www.irs.gov/publications/p544/index.html

Pantera
08-16-2004, 07:24 PM
Thanks that is what I was needing to read. Now if I can find someone that wants to trade I will have it made.

budnate
08-16-2004, 07:30 PM
call your local real estate agent and let them know what you want to do.. they are always networking with there regular customers and may have something on the side that may work for ya.

Bud.

NWYENKO
08-16-2004, 09:47 PM
Pantera, it is possible to do a 1031 Tax Deferred Exchange. You have 90 days to identify the replacement property and 180 days to close. You need to find a tax deferred exchange intermediary in your area , possibly in the phone book or ask your tax advisor. You have to make sure you are dealing with someone who specializes in these things. All the I's have to be dotted and the T's crossed! They work great! Jim

Pantera
08-17-2004, 04:47 AM
I had heard of something like that. I will look it up and see just what the rules are so that I can be sure to dot all the i's.

Thanks all for your help.

The GF thinks I should sell one of them on a contract for deed but I still think I am going to have to pay the same tax just on a defered pay out basis.

55chevy
08-17-2004, 04:58 AM
Hey Larry.. wait till after this Wednesday.. you just may have yourself a new renter.... http://www.yenko.net/ubbthreads/images/graemlins/wink.gif http://www.yenko.net/ubbthreads/images/graemlins/crazy.gif http://www.yenko.net/ubbthreads/images/graemlins/frown.gif but let's hope not