Consumption and Real Estate
Selling Rental Properties?
Question : Selling Rental Properties?
In August 2005, my grandmother broke her hip. Days later, we filed a warranty deed transferring her residence and both of her rental properties (1 residential and the other commercial). In July 2006, she died. Her residence has never been occupied because we expected to move her back into the home after he physical therapy was complete, however her mental state and physical health rapidly deteriorated. After maintenance and expenses, I am not profitable on the properties. We are electing to sell the properties. Both tenants are getting an option to submit an offer prior to the property being listed publicly. The commercial tenant has been renting since the late 1980′s and has always expressed interest in owning the property. The residential tenant is consistently late with her rent, so her ability to obtain a mortgage may be questionable. Any advice on tax and legal implications of the sale of both properties. Any concerns about the properties not having to go through probate?
residential home warranty
Best answer:
Answer by Donald C
There will definitely be tax implications. You will need the advice of an accountant, but I think you’ve created a cost basis based on the date that you transferred ownership of the proprty from Grandma to yourself. Her estate will be liable for those taxes and you (current owner) will be liable for the capital gains based on your cost basis (ie; what you paid vs what it sells for) It sounds like you have dodged the probate bullet since you’ve already transferred ownership. Again, you’ll definitely want to hire a reputable & creative accountant. If a prospective owner would like help regarding financing for a possible purchase, I’d sure appreciate a referral as that is my business.
Good luck.
Because of the time, the tax implication estate and capital gain. You have a couple things, was it consider inheritance or transfer of ownership. did you pay the estate for the property?
I recently took a bath on a property I held for 4 yrs but because of the loss over time, I came out ok on taxes.
Put the figures together and run it through Turbotax.
Make sure you have all your expenses for the restoration, and mileage to and from.
Personally, it sounds as if the commercial tenant would be a good way to option out of one of the properties. I’d avoid the renter like the plague.. Unless they can arrange their own financing, don’t go there. If you do, make sure you have your Ts crossed and I’s dotted. Make sure you have an out on the land contract. I know a lot of sellers get burned with tenants.. A slow paying tenant gives me a good excuse to raise the rent and get them out.