State Specific Question About: VIRGINIA (VA)

Some people won't like this idea. I'd check it with your lawyer and accountant.

Sell the place to a friend (not a relative) for what you paid for it long ago.You may have to pay tax on the depreciated amount. Then have your friend sell it back to your Roth IRS in a self directed IRA company (like Equity Trust). This will put the property in a self directed Roth IRA. Then sell it from the Self directed Roth.

I don't think there are taxes due on dispursements from the Roth. If there are, maybe sell it to someone on payments with the payments going into the Roth.

Anyway, you need to talk to some experts on this because the rules may have changed or because what I described might not work, so check good.

As far as I know, the amounts a person decides to sell a place for is between them and the buyer.

Some partners and I were selling a property. They could not be bothered with a 1031 exchanges, DST, simultaneous exchanges or reverse exchanges. Dealing with finding an up-tick. Educating themselves, paying a CPA and having a real estate attorney review the deal. They would rather pay the taxes.

Here in California, the sales load would entail:

Long Term Federal Taxes of around 20%

California State Taxes of around 13.3%

Recapture on any depreciated amount - 25%

If the profit was over 250K, then a medical tax of 2.9%

Sales commission 6%

Cost for Transfer Tax, Escrow, Recording and Title Insurance 2%

All all the above up and that's around 45-52% of the total proceeds.

So we all expected to get Half A Million Dollars out from the sale. But my partners did not consult a tax attorney. They dealt with their Family Attorney who gave them B.S. Advice. You know if they lived in the property for 2 of the last 5 years, then they have a $500,000 tax exemption. Again all B.S.

So they all got tax bills with late fee's and interest. If they paid their taxes on time, it would have been around $225,000. But instead it came to around $300,000. Leaving them with only $200,000 on the sale.

In my case, before title changed, I had the current title changed so I could do a 1031 exchange without my partners going with me. My legal and tax expert costs plus escrow ran me a whopping $2900.

Then I had 45 days to find three up-ticks. This is what I did:

I named a TIC (Tenancy In Common, as my back up- anywhere from $100,000 to $500,000 the total money I had).

My Second named property was shards/percentage of a local office property. Ground floor was a mall. Parking lot. Second and Third floors were offices and business suites for overnight motel like stay. That was listed as $250,000 in shares.

My third named up-tick was an oil drilling venture. I put in $100,000 per share and I get 10 wells drilled. If 2 drillings were bust, I get a all ready produceing well. Nobel it was called.

So I ended up , out of my $500,000, buying $100,000 in Nobel oil drilling. $100,000 in an apartment property in Tustin. $100,000 in the office property and I took out $200,000 and paid $100,000 in taxes.

SO my partners each had $200,000 cash out of their 1/2 million and I had $100,000 cash and $400,000 in investments.

9 years later I sold off my oil before the well went dry and got around $400K over the 9 years. I sold the office property and 1031 exchanged it into a apartment house that I own 100%. And the so on.

You make yourself a plan. Consult experts. Talk to other landlords who are going thru the same stuff you are. Then pay experts to protect you from losses.

My x-partners complained they would have had to take time off of work to learn the ropes. SO what!. What do they make on the job? $5,000-$10,000 per week? They lost $300,000 being lazy. When my accountant told one x-partner that I made over $1,000,000 income from the 1/2 million I got, they wanted to kill themselves. Money is a tool and you need to learn how best to us it to your advantage.

I also took monthly rents and applied it to my Children's college plan. That was pre-tax money. When money was left over, I used the college plan to pay for my added education.

i'm still out on the DST's because of the lack of flexibility in their liquidity if you have any changes of plans.