Retirement Plan
As plumber earning 110k for big 3 for next 10-15 years, I need to plan exit strategy for 3 single family rentals. All 3 began as owner occupied properties and rented out in 1999.
I have taken the depreciation each year and have no problem with paying 25% of what I depreciated but have a few questions.
1. If I hold the properties ( valued at 750k) with 280k owed on 30 yr mtgs.,for 20 years,what exit strategy do I use?
2. Should I try to sell now and get into less expensive / more positive cash flow properties?
3.Should I form a llc corporation for each property to protect my family?
4. Should I have 470k tied up like this only producing cash flow to break even and pay 3 mortgages thus allowing the total holdings(including primary residence valued at 350k) of 1100k to appreciat at 7% and take the tax write offs because of 110k income.
I planned on moving into each for 2 years to avoid capital gains but now my wife refuses to move due to the woods in back of this house. Help
Medusa52,
This is not an income tax issue; instead, this is an estate planning issue. Where you are now, where you want to be later, and how long you have to get there are all factors that go into developing your financial plan.
Talk these things over with a financial planner. Together you should be able to develop strategies to reduce your immediate tax liability and increase your net worth over time. Not sure if this person will be versed in asset protection as well, so maybe a lawyer should also be consulted.
You are talking about paying taxes, what about a 1031 exchange? and consolidating your properties into a larger property (multi unit or commercial). That way you could avoid capital gains until you cash out after retirement and by then you might have a lot more property.
what exit stratagy would I use at retirement after an exchange? what are my options? What would be the advantage of exchanging ( at risk of problems exchanging)?
Medusa52,
These are all good questions for your financial planner. Someone who has your entire financial posture in front of him and has discussed your immediate and future financial needs is in the best position to advise you on retirement planning.
Exchanging is not for everybody, and perhaps your and your planner will decide that refinancing to take cash out of your equity is a better approach to implementing your investment strategy.
Once again, my suggestion is to talk these things over with a financial planner. Together you should be able to develop strategies to reduce your immediate tax liability, increase your net worth, and meet your retirement goals.
Medusa52:
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