Posted by David Krulac on June 01, 2005 at 06:33:43:
since you owned for more than a year the Federal Income Tax, Capital Gains Rate is only 15%. If you don’t want to do a 1031, maybe you should just pay the 15%.
You will need to deed the property to your tic, his refi does not extinguish your rights to the property.
Tenant in Common - Posted by Newbie
Posted by Newbie on June 01, 2005 at 01:06:49:
I purchased a home in Lake Tahoe (Calif) with a friend as Tenants in Common about 27 months ago. There has been good appreciation. He is refinancing in order to buy my equity share of 30%. It has not been my principal residence. I’m fairly certain a quit clain deed (properly recorded) is needed here, however I have two questions if you please: 1)Does his refinancing automatically remove me from original trust deed? If not, how should I proceed? 2) Any way to avoid gains other than 1031 exchange? I would like to REI in the near future. Should I take the gain hit and use the remaining profit for future REI, or should I do the exchange? Any ideas are sincerely appreciated. Thank you. Newbie
Re: Tenant in Common - Posted by William L Exeter
Posted by William L Exeter on June 05, 2005 at 21:27:49:
Yes, you will need to record either a quit claim deed or a grant deed. You should consult with the closing officer handling the closing of the refinance transaction to see how they want it handled so there will not be any problems during the refinance. They may record the deed for you just prior to closing, or they may want it handled outside of closing prior to the refinance transaction.
The payoff and full satisfaction and full reconveyance (lien release) of the existing mortgage will release you from the lien. I would ask for a copy of the recorded lien release for your records to prove that it has been satisfied and that you are no longer responsible for the debt.
How have you been treating the property? Is it a 2nd home, vacation home or other personal use? If so, then a 1031 tax deferred exchange will not apply. If it has been held as investment property, then you could structure the sale of your TIC interest as a 1031 exchange transaction.
Let me know if you have any further questions.
Re: Tenant in Common - Posted by Dave T
Posted by Dave T on June 01, 2005 at 12:33:18:
Since you don’t tell us how much you are getting for your equity share, nor how much of that is your profit, AND since you don’t tell us how the property was used during your ownership, we can’t really give you a definite answer on whether an exchange will work for you.
The only reliable response you can get from us with the information you provided is to pay the 15% capital gains tax plus whatever state income taxes might accrue from the sale.