House Buyers of America, Inc.’s Post

Our Rental Tripled in Value—Here’s How We’re Using a 1031 Exchange To Avoid a Massive Tax Bill When my husband and I got married, we bought our first place—a brand-new, 1.5-bedroom condo—in Bedford–Stuyvesant, Brooklyn. At the time, the Bed–Stuy neighborhood was rough—for example, a biker gang that loved to throw huge all-night parties was headquartered at the end of our block, and there were abandoned buildings every few feet, often rustling with the sound of homeless inhabitants. Back in the early aughts, this ZIP code was not for the faint of heart. But at $375,000, a solid C-/D neighborhood was what we could afford in NYC, and our place was new and huge (for Brooklyn) at 1,200 square feet. Plus, I had a hunch. When we first toured the apartment, I went up on the roof and looked out over the neighborhood. From that vantage point, I could see three luxury buildings going up within a few blocks of us. I knew this neighborhood was about to change. We loved our place and lived happily there for many years. Then, two kids, one black Lab, and an inevitable migration to the Jersey ‘burbs later, our Brooklyn place transitioned into a rental unit. We had good luck as landlords and very low vacancy rates, renting to excellent tenants who always seemed to be at the same life stage as we were when we lived there: just married and about to have babies—since the .5 bedroom in our apartment made the sweetest nursery. Our Brooklyn rental, however, never drove significant cash flow. With sizeable monthly maintenance (typical for apartments in NYC) on top of our (fixed, 30-year) mortgage, we pretty much broke even every month. But man, did it appreciate. Over the last few years, we started to realize that based on this equity growth, we could make much more money with our money. With the 2024 resale value of our condo now hovering around $950,000 and a lot of downward pressure on it going much higher anytime soon (due to a hefty New York millionaire tax that kicks in when the sale price tops $1 million), our $800,000 in equity is not working nearly hard enough. We realized that, in this case, we were perfect candidates for a 1031 exchange. What Is a 1031 Exchange? A 1031 exchange is a tax-advantaged strategy that allows you to trade like for like and essentially kick the hefty capital gains tax can down the road. In our situation, this would save us a whopping $80,000-plus. 

Struggling with tenants who don't pay rent? Learn effective strategies to handle non-paying tenants and protect your rental income. 🏡 Read More: https://bit.ly/3XtvNvX #tenants #landlords #eviction #latepayment

Navigating rising rental costs? Tenants have rights! Learn about legal rent increases, when landlords need permission, and how to challenge hikes if they exceed the limit. Stay informed and protect your wallet. 💼🛡️ #RentalMarket #HousingRights #LegalAdvice https://bit.ly/3SpusUu

Our Rental Tripled in Value—Here’s How We’re Using a 1031 Exchange To Avoid a Massive Tax Bill When my husband and I got married, we bought our first place—a brand-new, 1.5-bedroom condo—in Bedford–Stuyvesant, Brooklyn. At the time, the Bed–Stuy neighborhood was rough—for example, a biker gang that loved to throw huge all-night parties was headquartered at the end of our block, and there were abandoned buildings every few feet, often rustling with the sound of homeless inhabitants. Back in the early aughts, this ZIP code was not for the faint of heart. But at $375,000, a solid C-/D neighborhood was what we could afford in NYC, and our place was new and huge (for Brooklyn) at 1,200 square feet. Plus, I had a hunch. When we first toured the apartment, I went up on the roof and looked out over the neighborhood. From that vantage point, I could see three luxury buildings going up within a few blocks of us. I knew this neighborhood was about to change. We loved our place and lived happily there for many years. Then, two kids, one black Lab, and an inevitable migration to the Jersey ‘burbs later, our Brooklyn place transitioned into a rental unit. We had good luck as landlords and very low vacancy rates, renting to excellent tenants who always seemed to be at the same life stage as we were when we lived there: just married and about to have babies—since the .5 bedroom in our apartment made the sweetest nursery. Our Brooklyn rental, however, never drove significant cash flow. With sizeable monthly maintenance (typical for apartments in NYC) on top of our (fixed, 30-year) mortgage, we pretty much broke even every month. But man, did it appreciate. Over the last few years, we started to realize that based on this equity growth, we could make much more money with our money. With the 2024 resale value of our condo now hovering around $950,000 and a lot of downward pressure on it going much higher anytime soon (due to a hefty New York millionaire tax that kicks in when the sale price tops $1 million), our $800,000 in equity is not working nearly hard enough. We realized that, in this case, we were perfect candidates for a 1031 exchange.  What Is a 1031 Exchange? A 1031 exchange is a tax-advantaged strategy that allows you to trade like for like and essentially kick the hefty capital gains tax can down the road. In our situation, this would save us a whopping $80,000-plus. The gist of the exchange is that you hire a third party to manage the transaction proceeds (if you touch the money yourself, you instantly forfeit the tax deferral benefit and have to pay capital gains taxes), and you are bound by very strict timelines. Here are the basic rules: New property needs to be of equal or greater value than what you’re selling. Need to identify the new property within 45 days of closing on the old (you can ID up to three properties). Need to close on the new property within 180 days of selling the old.

📢 New Blog Post! 🏡 Buying a home with tenants in Ontario? Our latest post covers everything you need to know about handling existing leases and becoming a landlord. Check it out for essential tips and legal insights. https://lnkd.in/g76XsG87 #RealEstate #HomeBuying #TenantManagement #DAMicoRealEstate

Rent agreement clauses that landlord, tenant should add to avoid fights in future https://lnkd.in/d4jMMpce Download Economic Times App to stay updated with Business News - https://lnkd.in/eK4XZsX #rentalpropertymanagement #landlords #tenants

Tenant's, read on to know your rights. #realestate #nycrentals #nycrealestate #nyc #tenants #renters #rentalagent #lease #realtor #nycrealestateagent #realbrokerage #realbrokerllc #realbrokerny

Learn how rent abatement works! Whether you're a landlord or a tenant, it's essential to know the ins and outs of rent abatement. Check out our comprehensive guide to understand your rights and responsibilities. #rentabatement #landlords #tenants

Learn how rent abatement works! Whether you're a landlord or a tenant, it's essential to know the ins and outs of rent abatement. Check out our comprehensive guide to understand your rights and responsibilities. #rentabatement #landlords #tenants