I am selling a duplex in Sacramento for 500k how much would I have for a 1031 after fees ?
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Bought in 1996 for about 100k. Assuming I use a realtor to sell the place….also how much would I have if I just sold the place and kept the money (I am an unemployed recent graduate so my only income as of yet is from rents (25k a year))… ALSO—> I am planning on using the 1031 to purchase investment property in Austin TX where I can get a far better %return, the problem is that the prop. tax is high (2.75%)…is the prop tax deductable on fed income tax? ALSO…will I have to pay CA state income tax when I sell the prop in Texas?
If you can answer ANY of the question I would be greatful…
peace
June 26th, 2010 at 12:29 pm
Wow!
My first thought is to talk to a CPA that specializes in real estate.
I have done several 1031′s, even some muli level ones and it can GET COMPLICATED in several areas.
Simply put, to do a 1031 it has to be for a like property (duplex) and the equity transferr has to match ($400K out $400K IN) I don’t know where you are going to find a duplex in Austin that will fit.
With $400K maybe you can buy it CLEAR and collect the rent. Rents are MUCH lower in Texas, so keep that in mind. Check rent.com and type in the zip code, you will be surprised. Looks like you are getting about $2K a month in Sacramento.
I am shooting from the hip here (I was married to a HIGH end real estate CPA and wrote her newsletters so I am going into the dust bunnies under the couch)
You will get a write off for taxes on both state and fed.
When you sell the place in Texas you will have to pay capital gains tax on BOTH your State and Fed taxes (CA. gets NONE if you change your residance to TEXAS)
If you are not a trust fund kid with NO WORRIES you might consider moving into one of the units until you score a job.
Bottom line, TALK TO A CPA AND PAY $200 AN HOUR to get the best info you will get in your LIFE!
Good luck,
J
Tax Accountant/ Rental Real Estate Investor
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