Today we’re talking about life transitions and real estate.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: Last program we were talking about how to land well with your investment portfolio. Well, in real estate, it’s significant at a scale, even in your personal residence, to have a similar discussion.
Bob Nelson: Well, it’s interesting because with a tax deferred exchange, you do have an opportunity to adjust your ownership portfolio, your real estate portfolio. Restated, you can sell a property that qualifies for a 1031 exchange or a tax deferred exchange. You can acquire another property that qualifies for a 1031 exchange, and if done in an extremely timely manner, restated, a very short period of time, you legally avoid the payment of the capital gains tax that would otherwise be due the federal or state governments, and you’re utilizing your entire equity forward to acquire the next property. Restated, you’ll be able to borrow the less money as you make that acquisition
Marcia Edwards: And in relationship to residential real estate, there’s also transitions that can be done gracefully and financially with some security for long-term care. What’s happening is they’re all living longer, and I’m glad for that because I’m going to be one of them pretty soon. In looking at that perspective, what you want to make sure you do is you have the ability to create a passive income. For example, some people are holding… they’re downsizing to something that could be a rental, the last home that they’re going to live independently and at that point they can transition that into a income source that’s passive income for assisted living.
Bob Nelson: Effectively I’m going to move out of my personal residence, continue to rent it out, continue owning it and renting the thing out as I make a transition into assisted living. Now, I could also potentially sell that personal residence and the federal tax code, which Oregon mirrors, allows the non-recognition of the first $250,000, otherwise taxable gain, per spouse. I could sell my personal residence, pocket as much as $500,000 if I had that much in equity without the payment of any form of capital gains tax, state or federal. I use that money to buy myself into assisted living.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.