“In this world nothing can be said to be certain, except death and taxes.” — Benjamin Franklin

Many owners I talk to have done everything right. They paid down the loan, held on for decades and kept the building in good shape. Then I ask what happens to it when they’re gone, and the answer is usually a shrug.

If you’d like to talk it through, call me at 714-328-0832.

REMINDER. Remember, I am a REAL ESTATE BROKER. I am not an attorney or a CPA. You should always look too your trusted advisors before making any moves regarding your properties. If you don’t have a trusted advisor, look at agencies such as the California Association of CPA’s. or the California Bar Association.(or whatever state you live or have property in.)

WHAT YOU SHOULD KNOW. Here are two things every California owner should know:

1) STEP UP The good news: the “step-up.” Under current federal law, heirs generally receive a stepped-up basis. The building’s tax basis resets to its value on the day you pass away, so the depreciation you’ve taken usually isn’t taxed back to your kids. (Tax law can change.)

2) REASSESSMENT. The surprise: reassessment. Your property taxes are low because of Prop 13. When a rental building passes to your children, it’s generally reassessed at current market value. The exclusion for children mostly covers a family home they move into. A building taxed on its 1990s value could see its property taxes jump several times over, and that squeezes the income your heirs depend on.

POTENTIAL PLANS OF ACTION. Most owners end up choosing among three paths:

  • Hold and plan, with a trust or a clear LLC structure.
  • Sell and exchange into something simpler (a 1031 exchange or a DST).
  • Sell and pay the tax.

MAKING A CHOICE. The right one depends on your goals, your family and your numbers. One more idea owners ask me about is cost segregation, which speeds up your depreciation deductions. It can pay off for recent buyers, and for long-time owners it’s often not worth the fee. Ask your CPA.

Thinking it through now is what spares your heirs a hard decision later.

Want to know what your building is worth? Reply with your address, or call me at 714-328-0832.

“Plans are worthless, but planning is everything.” Dwight Eisenhower

HOW PRS PROPERTIES CAN HELP

Whether you’re thinking about selling, exchanging, or just curious what your building is worth, here’s what we can do for you:

  • Know your value. We’ll give you a current idea of what your building is worth, plus rent and sales comparables in your area, so you know what your units should be renting for.
  • Get ready for a sale. We’ll suggest easy, inexpensive changes that can raise your value, and look for issues an insurer or buyer might ask you to fix.
  • Explore your options. Exchange into a larger or smaller property, or move into something with less management, like a triple net or a DST.
  • Get trusted referrals. We can point you to lenders, contractors, and engineers so you can choose who you feel best with, and help pull together paperwork for a refinance.
  • Get the most at closing. If you sell with us, we’ll put together an aggressive, targeted, professional marketing campaign to bring you the most dollars.

WANT TO SELL WITHOUT LISTING? 

We’re currently buying “as-is” properties: low rents, deferred maintenance, even a problem tenant in place. We can offer a 7-day escrow and all cash at closing. We’ve also put together many off-market transactions over the years, including for 1031 investors who need to identify a replacement property before their 45-day window runs out.

  1. Curious what your building would sell for today? Call or email for a free opinion of value.
  2. Want to see what similar buildings have sold for lately? Call or email and I’ll send you recent comps.

On the fence? We’ve been doing this for nearly 50 years, and we’re always available to chat. If you’re thinking of selling, or just curious about your property’s value, give us a call. No pressure.