Medicare gotchas...

Sawfish said:
So if I'm following this correctly, it sounds like there's no direct report of Roth distributions, and this implies that taking distributions out of a Roth does not raise your IRRMA for Medicare?
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It seems that way Sawfish. I don't want to be definitive and wind up telling you the wrong thing. I have no way of knowing if every financial institution handles their Roth reporting like Schwab and AmCent did. I'll be interested to see what happens when the 2022 tax documents are ready. I no longer have AmCent though.
 

OneEyedDiva said:
It seems that way Sawfish. I don't want to be definitive and wind up telling you the wrong thing. I have no way of knowing if every financial institution handles their Roth reporting like Schwab and AmCent did. I'll be interested to see what happens when the 2022 tax documents are ready. I no longer have AmCent though.
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No guarantees. Just the discussion puts it on my radar screen for more investigation.

Thanks!
 
Sawfish said:
As I understand it, depreciation recapture comes into play if you take boot. If you do a 1031, it pushes forward until you *do* take boot. This is independent of rent, and is determined on acquisition as a combination of depreciation brought forward from previous properties and depreciable basis of the acquired property.

Is this correct?

If so, I'm not sure that this applies to tenants in any way.

What we have done for the last 30 years in an expanding rental market is to hold steady on rents until either:

1) units go vacant, at which time we seek ~85% of average market rate for the area (as determined by our property management company);
2) or a unit has been occupied for the average length of tenancy for that building as calculated over the last 5 years (this is on a spreadsheet). At that time we raise to 75% current average market rent. This, too, is on a spreadsheet.

But I can see your point about staying competitive in the investment market, now that the state has rent control. It's not possible to sell a pro forma projection of expected on increased rents under a new owner. They are bound moving forward by the controls, and if the property is significantly under-rented, it could take the new owners 2-3 years of max allowed rent raises to come to market rates.

But I don't think that I've ever encountered tenants who take a rent increase as a gentle reminder that it costs you, the landlord, more money to keep the place in top condition. This would mean that hey'd be appreciative of the increase, and that's just kidding yourself. They just don't think like that.

And yes, I am a nice guy... :^)
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that is my understanding too.
Businesses take depreciation on capital equipment, resource extraction, patents. We have a capital structure that also needs maintenance. So I see no reason not to take depreciation and recapture on sale.

I agree with you with rent increases and tenants. We only increase our rent by 2% in 2022. Owned since 2018 in a new build (1031 from land sale). We have held rent constant until this last renewal. We had to replace kitchen flooring and new hot water heater in 2022.
 
Sawfish said:
So if I'm following this correctly, it sounds like there's no direct report of Roth distributions, and this implies that taking distributions out of a Roth does not raise your IRRMA for Medicare?
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correct roths are not taxable income

we has sold an asset in 2015 , were still working and not on medicare yet .

my wife went on two years later and we retired .

that asset sale in 2015 triggered the iirma surcharges since they go back two years .

we appealed the increase since we were not retired and not on medicare at the time of the sale .

by the time our appeal came up it was april and we filed the previous years taxes which showed a greatly reduced income so instead of going back two years they used the previous years taxes

social security agreed that since we had a life changing event they would roll us back and refund us the iirma surcharges , which they did.

however had we been already retired and on medicare the sale would have stood and effected us .
 

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