Q: For tax attorney: A multi-unit owner occupied apartment, how to calculate the owner occupied interest percentage?
-> Alice and Frank (both +55 Years old) sell a 9 unit apartment complex in Los Angeles, CA for $1,900,000. They have lived and owner occupied 2 of the 9 units and estimate 28% of the apartment should be claimed as their principle residence.
-> They have lived 10+ Years and owner occupied 2 of the 9 units.
-> They use a 1031 Exchange for their replacement property. A SFR Condo for $475,000.
-> They want to take advantage of the Senior Citizens Tax Base Transfer RTC69.5, Prop. 60. Because their new home ($475,000) is less than the value of their existing home (28% x $1,900,000 = $532,000) they intend to transfer the previous tax basis to their new property.
-> Based on previous property taxes of the apartment, the property tax basis of the old property was $695,360. Using 28% as the principal residence figure, that gives us $194,701.
-> Therefore, they intend to transfer the $194,701 (x2%) tax basis to their new residence.
Is this possible? Legal? Feasible?
A: You're going to have to hire someone to get that level of analysis.
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