Talk with the agent that you like and ask him. How long has it been since you first contacted the seller's agent?

It was about 3 or 4 wks ago I first contacted sellers agent - then a few days ago on Monday because she said there might be another buyer I said I would decline, just not having enough info and of all the possible scenarios it didnt look like had enough $ to afford it. I mean just cos a lender tells me I can have a boatload of money, doesnt mean its a good idea! I still dont know if I really can swing it - a lot depends on what new guy tells me re value of my current house - but at least I think I can make a better decision about it and if it was to go forward, and if something happens w my Mom sooner rather than later, I can have someone to act in my behalf.

What state are you in, it might make a difference.

In regards to the 1031 exchange, are you considering exchanging the rental half of the duplex for another rental and selling the half that is your home? You can’t do a 1031 exchange on your home.

A side note. You mention that your Mom is ill and you may need to make side trips. Make certain you have enough money for both those side trips and the new residence. Also consider that you may have to move to where your Mom lives or she may need to move closer to you if there is no one close to handle what is needed.

".......since my Mom's dream was to have a B&B and this could be that...."

Why don't you purchase the house with your mom? Two incomes would be better than one, and make your current home a rental property.

Question - if listing says "for sale-active" does that mean they havent received - or accepted an offer? Or maybe they received it but are still going back and forth with negotiations? I see some others have "pending" or "offer show" - what exactly do thosee mean?

That means the home is currently available for sale

Active means on the market, not under contract. They may have received an offer but it has not been accepted yet. In our MLS we have to change the status within 48 hours. Pending means under contract, not closed yet. Different areas have different categories. In our area we also have contingent (under contract with contingency) or Backup (under contract but seller looking for back up offers).

^To expand a little bit: Sometimes a property will show active but it is actually under contract and the Listing Agent/Office hasn't updated the MLS just yet. Always ask first if the property is actually available. Actually have your agent do this part :)

A property can be "Contingent" on anything. Common contingencies include financing and inspection. Less common is contingent on the sale of buyers home. These are good homes to have your agent explore their possibilities of coming back on the market.

The property labeled "Backup" is the listing agent telling you that there is some weakness in the contract so the seller is looking for a stronger deal to backup the original contract (2nd place deal) that will actually close.

The weakness can be anything. Common weaknesses: Sale of Buyers property and there is a kick out clause. Kick out clauses start once the backup offer is made and the first contract buyer has (usually) 72 hours to remove the contingency. If they can't perform, then the first buyer cancels. Sometimes there isn't a weakness, but the reason it states backup is either to obtain further buyers or to quell fears of the contract falling through.

I have personally sold homes to buyers where my buyer ended up with the property and the first contract fell through for some reason that was purely that buyer's quirk and not related to the inspection of the property. In those types of sales, the property never actually goes back on the market because we had a backup in place so when the first contract cancelled, it went automatically to my buyer through the backup contract process. Ask your agent for details. So don't skip over those backup listings or contingent listings. You never know the inner workings of any specific P&S contract unless you are one of the parties. Your agent would be able to get the info so you know the approximate probability of the property making it all the way through to closing.

thx Denita and all. Im still about where I was when I started. The accountant gave me a bunch of numbers and its still clear as mud. He was on vacation out of the country 2 weeks, and now hes gone again.

Question - WHO exactly do I go to to look at the big picture and advise? I thought this guy would and could act more as a financial advisor vs. just tax accountant. I got an info dump, but I could use help processing the data.

Does 1031 address both cap gains AND depreciation recapture tax? Articles seem to only mention cap gains.

Any truth to the idea that if I live in the other (rental) unit for two years (while renter moves into my unit) and THEN sell my house, I would be exempt from payment of cap gains? What Ive heard is that its a matter of living in each unit for 2 out of 5 years, and I would have done that. The accountant however says I would have to kick out all renters and live in whole building for 2 yrs, without any renters. I suppose he is the more reliable source....

The place is still available Ive learned - which is starting to make me wonder why its not selling and do I want to be somewhere where it takes so long to sell a place.

I feel at a huge disadvantage cos I dont come from wealthy people - not only lacking the proverbial rich uncle to advise me, but growing up working class or poor you do absorb the message "you dont deserve nice things." This place is already a functioning guest house and it looks like it could be a great opportunity to make some money and change my life.... but I dont quite trust it not having someone to work through the pros and cons. Whew - I guess I need to see a therapist too LOL!

Your scheme about moving into the rental for two years doesn’t work either. There are special rules for a rental converted to a residence.

Find an Enrolled Agent (the only credential offered by the IRS) that has expertise in Like Kind Exchanges aka Starker Exchanges aka 1031 exchanges. You need to sit down with someone face to face and most likely pay for their assistance.

All a 1031 exchange does is delay paying taxes on gain from the sale of the property. You will eventually pay taxes unless you die owning the property. In a like kind exchange, your adjusted basis in the old property is the basis in the new property plus any boot (or cash) you may pay to acquire the new property. The depreciation that was claimed or should have been claimed rolls to the new property.

You need to dust off your crystal ball and look into the future to decide if a like kind exchange is the best thing to do. You may end up paying more in taxes in the future if tax laws change.

I agree with the above - the 1031 is to delay paying taxes on the gain from the sale because in a 1031 exchange there is no sale. You can trade up or down in an exchange. You are exchanging one property for another like-kind property. It is also a very good idea to get a consultation (virtual or face to face) with a CPA or enrolled agent so you can get all your questions answered. You need the answers to your specific tax consequences for this property whether you choose to sell it, exchange it or keep it and buy the new one to move into as your primary residence.

The above post is right. The cap gains taxes are separate from depreciation recapture and only the capital gains taxes are deferred in a 1031 exchange. This is why you need the professional consultation to see how your taxes are impacted.

There are other questions: do you need to sell this property in order to obtain the cash needed for the purchase of the new one or do you have the funds to do it without selling your current property?

If you have the funds to acquire the new property, would you consider keeping your current property and renting out both units for cash flow and appreciation? Or is the risk too high? Only you can answer this one.

As to why the other property hasn't sold yet: there could be any number of reasons. It could be price relative to it's current condition. It could be an unreasonable seller (we don't know anything about the seller). If you had your own agent, the agent could get you additional info so you know why it's sitting.

Denita, the depreciation claimed on the old property is carried forward. It has to be recaptured with when the new property is sold. No taxes are paid on the accumulated depreciation when one property is exchanged for another in a 1031 exchange. Eventually when the second property is sold, the depreciation on theold and new will be accounted for and taxes paid if required.

Here is my two cents. Pass on the property. I'm sure it's great and you would love it. However, you have some homework to do and need some education. Preparation is key to success.

First, your mother will require both your time, attention and some expense. You don't want to be distracted or stretched. Second, you need to hire a CPA who is well versed in the subject of 1031 exchanges. They can be complicated. You need to learn about them and understand them. The CPA or enrolled agent will need to educate you on all of your future options and consequences so that you an understand without any pressure or distraction the best course of action. You don't want to do this under pressure or with time constraints.

To answer the first question, you have no contractual obligation to the selling agent. If you do decide to pursue the property, you need to call the selling agent and explain that you are more serious about the property and will be hiring your own representative. It's the professional, ethical thing to do. If you are uncomfortable with doing this, have your new agent contact the seller's agent for this purpose. A truly professional agent will appreciate the notification. Many agents don't like to represent both sides of the table due to higher dual agency ethical requirements. To state it simply, it can be hard to fully serve two masters at the same time.

I'm a proponent of keeping things as simple as possible. You need some education and you need to acquire it without pressure. Once you get this education, you will be armed with the information you need to make the best possible decision.

Thank you for the correction jlhug. This is why I always refer my customers to seek info from CPA's....:)