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Buying or Selling a Home/Selling a rental home with depreciation

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Question
My husband and I have owned a rental home (paid off) for many years.  We were recently making out our will.  My husband said if something were to happen to him first that I probably couldn't get more than $50,000 out of this rental home that is worth at least $110,000 because he has taken so many depreciations on it.  Is there any truth to this and why would he take these depreciations?  Not clear on what's going on here.  Please explain if you can.  Thank You!

Answer
Hello Becky - The issue here is that when you take depreciation you postpone paying tax on the depreciated amount, which catches up to you when you sell, along with the capital gains tax. I recommend talking to estate planing and "1031 tax exchange" professionals. The objective is not to look at your net worth as single individual assets, it is rather to look at your total estate in whole and talk to these specialists who can show you additional strategies and avenues to protect your hard earned assets, including the possibility to reduce or eliminate amount you may 'think' you owe (based on the depreciated value). Having been through a number of real estate sales caused by the death of one of the owners, or both, I can share with you these families could have saved thousands and hundreds of thousands through smart planning, which they did not do. In the end estate planning is the best legacy plan you can have for yourself, your husband, and your beneficiaries. However, the ignorant thing is when families think they can do it themselves amid the state and federal death taxes, and probate issues. A Will in itself is not enough. Please understand, I am a REALTOR and not an attorney nor tax specialist, therefore you must find these answers from licensed individuals in there respective fields of study. Thank you -  

Buying or Selling a Home

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Todd C. Menard, GRI, rCRMS, REALTOR, BROKER

Expertise

National Association of Realtors Code of Ethics and Professional Standards * Contract Questions: Arizona Real Estate Purchase Contract, Exclusive Buyer Broker Contracts, Listing Contracts and associated contract documentation (addenda) as it relates to boilerplate, covenants, contingencies, procedures and procedures. * ARMLS Arizona Regional Multiple Listing questions * Real Estate Professional Standards and Practices, Ethics, Obligations, Duties * Agency relationships in Arizona, Procurring Cause * Questions typicaly arising during the listing period * Questions typically arising during the escrow period * Questions about working with a real estate agent/REALTOR * Questions Related to New Home Builders

Experience

National Association of REALTORS Board of Director (2011, 2012) Arizona Real Estate Salesperson License (1991-1995), Arizona Real Estate Brokers License (1995-Present), Arizona Association of REALTORS Board of Directors (2008-2013), Arizona Association of REALTORS Professional Standards Committee (2008-2012), AAR Certified NAR Code of Ethics and Professional Standards Instructor, Southeast Valley Regional Association of REALTORS President (2012) Southeast Valley Regional Association of REALTORS Board of Directors (2008-2013), Southeast Valley Regional Association of REALTORS Grievance Committee Chairperson (1998-2007), Southeast Valley Regional Association of REALTORS Bylaws Committee (2008-2010), Southeast Valley Regional Association of REALTORS Education Committee (2007-09), Arizona Association of REALTORS Forms Committee - Residential Purchase Contract (2005), Arizona Association of REALTORS Forms Committee - Residential Rental Agreement (2008), Arizona Association of REALTORS Forms Committee - Buyer Broker Agreement (2009), Arizona Association of REALTORS Presidents Advisory Group, Road to Professionalism (2009), Arizona Association of REALTORS GRI Curriculum Review Committee (2009), Arizona Department of Real Estate, Commissioner's Education Advisory Group Sub-Panel B (2010) Arizona Department of Real Estate, Commissioner's Statute and License Review Committee (2007)

Organizations
National Association of REALTORS, Arizona Association of REALTORS, Arizona Real Estate Educators Association (AZREEA), Arizona Regional Multiple Listing System (ARMLS), American Notary Association, Southeast Valley Regional Association of REALTORS (SEVRAR), Southeast Valley Regional Association of REALTORS Women's Council of REALTORS (2010-Present), Phoenix Association of REALTORS (1994-2000, 2005-2009), Scottsdale Association of REALTORS (1994-2000, 2005-2009), Maricopa/Glendale Association of REALTORS (1994-2000, 2005-2009),

Publications
"Real Estate in 2008"- Lifebushido Publishing (Contributory Author), Southeast Valley Regional Association of REALTORS "SEVRAR Magazine", Internet Crusade, RealTown ListServe, Blogger.com, Active Rain

Education/Credentials
- Certified NAR Code of Ethics and Professional Standards Instructor, Graduate REALTOR Institute (1993), Certified Negotiation Expert (CNE), Over 100 Hours of annual real estate continuing education, Annual Ethics and Professional Standards Development Workshops as required by the National Association of REALTORS, Approx. 36 hours of NAR Code of Ethics training annually, Numerous IDW, Seminars and Train the Trainer programs, Business Management Degree - 1981

Awards and Honors
2009 REALTOR of the Year Award, Southeast Valley Regional Association of REALTORS (10,000+ Members), Double Platinum Production Award ($45,000,000 Sales Volume)- Keller Williams Realty Int'l (2001), Top 15 Sales Production Keller Williams Realty International (2001), Top 5 Sales Producation Keller Williams Realty Southwest Region (2001), Top Recruiter Award - Keller Williams Realty Int'l, SW Region (2002), Who's Who in U.S. Executive (1983), Who's Who in U.S. Real Estate Professionals (2007)

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