Buying land here for now, out of state later or out of state now?

[oldcorpgunny]

I did not know know that. Thanks for the info.

Does it have to be rolled into another "rental property" or can it be shown to purchase something else (ie: land)?

When exchanging properties under a 1031 or a 1033 exchange, they must be "like" properties. A house for a house, apartment for an apartment, etc. Talk to an expert (usually for free because they would like to be the neutral "holder" until the transaction is completed.

 

[whitney]

Tax exchange is a good plan but it has to be a "LIKE" property. Like property meaning a rental for a rental, not a rental for unimproved land.

Considering you will be here a little while consider the capital gain tax is abrogated on sale if you lived in it for the last two years I believe.
Not knowing your situation but thinking strategically, Sell your current abode at a profit, move to one of your rentals and it becomes your primary residence; live here the allotted time and sell for profit.

You get the idea. At any rate it is hard to evade the tax man, the idea I believe is to purchase land and develop a little at a time. Define your timeline and commit to a strategy; you can do anything for 30 days.

I committed to a similar plan and cam out way ahead, sold for more than it was worth because of supply and demand. I also recommend spending some money on good tax advisor you trust, it is worth the hourly rate they charge.

~Whitney

 

[HB of CJ]

Do not be put off or intimidated appealing your property tax bill. I have done so. Do the homework and keep your presentation short and precise. On that appeal day the County was loosing just about every property tax assessment case. They were not happy let me tell you.

 

[1371JarHead]

Both Oregon and Washington will be increasing their property tax rates to new highs! Buy land in Idaho. I'm looking at the Bonners Ferry area.

Idaho will be the new Seattle/Cali area, they are moving to the greater Boise area by the bus loads, look at property taxes already at all time highs, just a few years ago you could be a sweet house for under 150k now you are lucky to find something in the 400k, and it will get worse...me I thinking im relocating to western MO..

 

[oldcorpgunny]

Tax exchange is a good plan but it has to be a "LIKE" property. Like property meaning a rental for a rental, not a rental for unimproved land.

Considering you will be here a little while consider the capital gain tax is abrogated on sale if you lived in it for the last two years I believe.
Not knowing your situation but thinking strategically, Sell your current abode at a profit, move to one of your rentals and it becomes your primary residence; live here the allotted time and sell for profit.

You get the idea. At any rate it is hard to evade the tax man, the idea I believe is to purchase land and develop a little at a time. Define your timeline and commit to a strategy; you can do anything for 30 days.

I committed to a similar plan and cam out way ahead, sold for more than it was worth because of supply and demand. I also recommend spending some money on good tax advisor you trust, it is worth the hourly rate they charge.

~Whitney

The federal limitation for avoidance of Capital Gains Tax on a primary home is $250,000 if you are single or $500,000 if you are married. This amount may be used to cover two homes if you have lived for at least two years out of the last five, in one or both of them. It is ostensibly a one-time exemption, but in practical terms, I have seen it used several times by homeowners.

 

[CountryGent]

Idaho will be the new Seattle/Cali area, they are moving to the greater Boise area by the bus loads

This is interesting. It has been a while since I've had any reason to be in Idaho, but I keep seeing comments like this online. Yikes.

 

[Bushman]

I did not know know that. Thanks for the info.

Does it have to be rolled into another "rental property" or can it be shown to purchase something else (ie: land)?

It has to be rolled into a like kind investment. You can take any rental property and exchange it for other investment property. A house to a strip mall, a strip mall to office space, mix and match, etc. To top it off you have to replace the debt. If you owe $300 on the investment, you have to have a loan of at least 300K on the new purchase. There are also holding period requirements, etc. The tax doesn't go away, it's just deferred.

You can also move INTO the replacement property after a period of 2 years. You can also eventually sell the replacement property with pro rated capital gains between qualified and non qualified use.

 

[Bushman]

The federal limitation for avoidance of Capital Gains Tax on a primary home is $250,000 if you are single or $500,000 if you are married. This amount may be used to cover two homes if you have lived for at least two years out of the last five, in one or both of them. It is ostensibly a one-time exemption, but in practical terms, I have seen it used several times by homeowners.

It is not a one time exemption. Section 121 states you can use the exemption every two years. This does not apply to rental properties though...except in very limited circumstances (2/5 year rule) but beyond that the gains are pro rated between periods of qualified and non qualified use.

 

[Bushman]

This is interesting. It has been a while since I've had any reason to be in Idaho, but I keep seeing comments like this online. Yikes.

Yes it is scary, I keep reading this too and that the mid-west is not as red as people think it is, same for Texas, Florida, etc.

 

[Bushman]

When exchanging properties under a 1031 or a 1033 exchange, they must be "like" properties. A house for a house, apartment for an apartment, etc. Talk to an expert (usually for free because they would like to be the neutral "holder" until the transaction is completed.

They are not free....and they don't "would like to be the neutral holder until the transaction is completed" this is COMPLETELY false and I see lot's of people online who have never done these regurgitate misinformation they read, heard or googled.

1) They charge you a fee for the sale and purchase of each property, it's called a qualified intermediary and they are attorneys....I see people online all the time who have never done these misquoting the facts around these exchanges. I've done 3 of them and know the tax code and regulations like the back of my hand.

2) They don't want to be a neutral holder until the transaction is completed, lol. The law REQUIRES them to hold the funds from escrow post sale, then wire the funds for your replacement properties. It has nothing to do with "they'd like to"....There are timelines for how quickly you have to identify a replacement property and get it under contract and timelines for how quickly you must close.

Nonetheless the fees are far less than the capital gains tax and depreciation recapture.

I'm also a licensed part time realtor (not my full time job) not just an investor but I first did these as an investor and know more about it than most realtors because I've actually done them.

 

[Bushman]

The federal limitation for avoidance of Capital Gains Tax on a primary home is $250,000 if you are single or $500,000 if you are married. This amount may be used to cover two homes if you have lived for at least two years out of the last five, in one or both of them. It is ostensibly a one-time exemption, but in practical terms, I have seen it used several times by homeowners.

It is NOT a one time exemption. You don't really seem to know much about this or like kind exchanges. You can use the primary residence exemption every 2 years...so that's why you've seen it used several times by home owners despite your claim that it is "ostensibly a one-time exemption" which is false.

But besides this and the information you gave for like kind exchanges, you really seem to not fully understand the actual laws or facts around these matters.

 

[notazombie]

This is interesting. It has been a while since I've had any reason to be in Idaho, but I keep seeing comments like this online. Yikes.

Those comments are usually made by people that aren't from here too. True, Boise thinks it wants to be Liberal and woke. But most of the rest of the state just wants to be left alone. My personal experience is that the majority of people moving here want Idaho to stay the way it is, not try to change it into something else. Idaho most certainly won't be "the new Seattle/Cali area" any time soon.


To the OP's point, if you've got another 2-7 years there, none of this may matter.

 

[johnny bob]

But Dude!
I give the best advice!

I once heard that free advice is worth what you paid for it.

 

[sobo]

You heard right...

 

[MP15]

Same here.

as am I sounds like the neighborhood is looking good

 

[bgdawgrr]

Just refinanced; independent estimator said $350k, county assessor said $400. Never underestimate the govt's tools to screw us.

Unfortunately, appraisals on refis are almost always lower than what the same property would appraise for as a new sale. That spread is pretty extreme though.
I'd have a competent realtor do a market analysis of your property. That's going to give you the best value and best ammo for re evaluation.

 

[NW Backpacker]

So buy here now, buy in Idaho now or wait?

Not enough info given to make an educated recommendation, but I'll put in my 2 cents anyway.

IF it is the case that Seattle property is over priced today, and if it is the case that the economy is going teets up as soon as the feds stop giving out cash like drunk sailors (no offense to drunk sailors), and if it is the case that unemployed people cannot pay rent and the goobermint will not allow landlords to boot 'em out, and if it is the case that Boeing (major Seattle employer) can't sell planes, and if all of that causes real estate prices to fall by 50-75% over the next year, and if you have quite a bit of equity in your property that you could access if you sold today (even after paying the capital gains tax), then I'd sell that crap and go to Idaho before Labor Day if at all possible! Anyone who takes my investment advice is an IDIOT, but that's what I'd do.

 

[JohnnyMac]

I think the majority of folks from the People's Republik of Kalifornia that are moving to Idaho are probably conservatives trying to escape the madness... That being said, the big city (San Fran / Seattle / LA / PDX) are probably much happier in something familiar like a more metropolitan-ish Boise....

Guy is kind of a goof and at 2:06 his math is questionable, but covers some pretty good info.

 

[NW Backpacker]

I think the majority of folks from the People's Republik of Kalifornia that are moving to Idaho are probably conservatives trying to escape the madness... That being said, the big city (San Fran / Seattle / LA / PDX) are probably much happier in something familiar like a more metropolitan-ish Boise....

Guy is kind of a goof and at 2:06 his math is questionable, but covers some pretty good info.

Good video. He tells the story of "Idaho" statistics, but Idaho statistics will not be what drives political decisions WHEN, not if, Boise grows large enough to dominate the state the way Seattle and Portland do. If they can set up an electoral college type system that gives each county equal say, then they may be safe, but decisions based on statewide popular vote could some day (not yet) be dominated by Boise which has elected D mayors since 2004:

List of mayors of Boise, Idaho - Wikipedia

en.wikipedia.org

For now, Idaho gun rights "seem" to be safe enough, but that's what WA and OR said just a few years ago. Today's gun control politics has no similarities to those of 20 or 30 years ago. The party of gun control has been working at a frenetic pace for decades to indoctrinate young folks to dislike guns and now they are voters.

 

[sealine]

Some of you folks mentioned property taxes as one of the deciding factors...

My grandfather is 98. He bought a small farm house in 1950, in Helvetia (Hillsboro) in Washington Co. The first year he was there, his property taxes were $29/yr. In 2019 his property taxes were over $2900/yr.

For those of you young enough for the math to apply, take your current property taxes and add TWO zeros to the end of it to get an idea of what you'll be paying in 70 years...if you're currently at $3,000/yr., that'd jump to $300,000/yr.

If you say it can't happen or would never happen, I can introduce you to a pissed off old guy in Helvetia who'll disagree with you.