Buying STX land
I am currently trying to sell my duplex in Pennsylvania. I lived in one unit and rented the other unit out for 5 years. 6 months ago we moved out and am now renting both units as I try to sell it. I am concerned that I will have to pay Capital Gains tax on at least 1/2 of it. I am still looking into that so if anyone knows please let me know. In the mean time I am looking at my options to avoid the tax.
My boyfriend and I have been seriously considering a move to STX in about a year and 1/2. We have not been to visit yet and will certainly come down for an extended stay before finalizing any of these plans but we would like some advice to help us weigh our options. The way it looks if I reinvest my money in some land I can avoid the tax. We are thinking about buying a piece of land very shortly after selling the rental property and if all goes as planned we would eventually build on this land. If things don't go as planned we would just sell the land, hopefully at a profit.
I am wondering if anyone can give some advice or opinions on this idea. You all are so helpful and I am so glad to have this board to help in making plans!
Check with an accountant regarding the capital gains issue. I assume you are you thnking of buying land in STX, right? Make sure you understand the requirements and restrictions of 1031 exchange if you move the money into a land purchase without capital gains. Also, you may want to consider keeping the income property as opposed to selling it. It may be a better return for you as you would not be paying selling costs and purchasing costs (and potentially capital gains) to make the exchange. Finally, you must be in a position to afford building on it in STX. Your income when living on the islands would need to be sufficient to qualify you if you plan to be living there before you build (unless you can afford to pay cash). There are a lot of moving parts in your scenario, get some good counsel.
While I'm not a CPA, I don't think selling a residence in PA and buying anything in STX will help you avoid taxes. $250,000 profit on the sale of the residence portion is exempt from taxation completely regardless. The balance of the profit is taxed as a long term capitol gain which is very low.
Buying waterfront or water-view land in STX is generally a good investment idea. STX, the Dominican Republic and Roatan are considered, by island real estate experts, to be very undervalued islands with considerable appreciation expected in the next 10 years.
There are many tax related issues to rental/owner property.
Do not come to a forum for tax advice. Although IslandEd's advice is right on......Visit your accountant.
I really wasn't looking for tax advice, I just thought if someone happened to know they could tell me. I will talk to my accountant about that so please don't feel the need to give me any more information regarding taxes.
What I am looking for on this board is information about purchasing land on STX and what areas to do this. We have thought we would like to live high up and near the rainforest. I am just curious of what locations would be best and how to go about it if not living there, how long it takes, etc. I apologize for not making that clear.
10 best locations to buy land on any island for price appreciation, in descending order are:
1. Elevated sandy beach front
2. Any sandy beach front
3. Any direct waterfront
4. Water view - within walking distance to a sandy beach front
5. Water view - within walking distance to any waterfront
6. Water view - 360 degree (a tie with #5)
7. Water view - 180 degree view
8. Water view - Any, even a peek
9. No water view - abutting golf course
AS for the best general areas to buy land on STX for price appreciation:
GO WEST - this is where the action will be in the next 10 years. Very undervalued. Newcomers with money will find it the most attractive part of STX. Because it is! Old stigmas will evaporate when new developments start. Green and lush, the gringo's island dream.
Thank you for all of that, very helpful.
Melissa - you can explore the current offerings available in the MLS on STX on my website at http://www.ourhomesite.com/stcroixhomes
If you find properties of interest and want more info on specific listings, feel free to PM me on this site with the listing numbers or to email me directly via the link on the website. I can get you extra photos of property and other info that might help you to add properties to your short list and to weed out others. Eventually you should come to the island and explore to find out the areas you truly find to your personal taste and to look at lots in person.
Definitely talk to your accountant about your best strategy for investing in real estate while avoiding the most taxes. We do have the ability to do 1031 exchanges here on investment properties, so that is one possibility even if you face capital gains on your duplex. Actually you only have to live in a property two out of the five years prior to selling it to avoid capital gains on your personal residence up to the maximum limit, so it's likely that the second half of the duplex is covered by that at the very least even though you recently moved out.
If you have trouble figuring out where neighborhoods are located on STX as you look at the addresses in the MLS, you can find a map that shows most of the "estate names" at: http://www.virgin-islands-on-line.com/maps.shtml
That may help you get at least a general understanding of where a property is located. Be aware however that there are a few estate names that are used 2-3 times in different "quarters" or sectors of the island.
Happy lot hunting!
I highly recommend Alexandra. We dealt through her when we bought our condo. Couldn't have been more pleased with her service. She was especially great about answering questions while we were still on the mainland. Some realators only want to make an appointment and then when you are on island answer your questions.
Melissa, I know that you said that you did not want any more tax advice but I had to offer up one more option!
Alexandra is right when she says that the rule for exemptions on capitol gains is based on owner occupancy during two of the last five years. So if you have a duplex, you could move to the previously rented side for two years and be able
to avoid all capitol gains up to $250,000 single, $500,000 married. There may be specific personal reasons that this wont work for you (job transfer, need more room,) but it is legal!
Thank you for recommending Alexandra. From what I have been reading on this board she seems very helpful and is the realtor I would like to work with. I will PM her regarding my situation. It does seem that a lot of people are hesitant to offer much help to those still on the mainland and I can't say I blame them. I am sure a lot of people who "plan" on making this move never do. That's one reason I am so glad for this message board.
Thank you for your advice. I actually thought of that last night and was wondering if it was possible. I don't think it will work for me at this time as I am not planning to live in the area for 2 more years if I can help it. I am also hoping to sell this soon so that I can really start making my plans to move.
I will PM you soon, as soon as I get some time to explain what I am looking for.
Thank you all very much!
I would be careful with buying land out west. The realtors I know have been here 20+ years. And they been hearing for 20+ years that the west has to take off and it hasnt. If it doesnt have a 360 view or isn't directly on the water I would think twice about buying land there as an investment. If you're buy because you love it out there that is another story. And of coarse I am not talking about the north shore area that is on the west side, that would be a good investment.
Thank you Betty for your input. I was wondering what the west side is really like. I haven't heard a lot of good about it as real estate is concerned.
There is something to be said about conventional wisdom, but savvy real estate investment isn't it. Follow the monied global developers rather than the local naysayers. There are going west not east. The reason the west end (including the northwest) is going to be such a good investment is precisely because it has historically been depressed. The smart money will look forward, taking advantage of the lower prices. But I do agree, don't buy anything that isn't waterfront or have a terrific water view.
There are two resorts that are going to be built on the south shore to the east. And the west has been historically depressed for how long? Because I'm local in your mind independent man mean I have no idea what is going on in the world? I don't think you have any idea what you would have to overcome here to turn the west end around. And a resort or two is not going to help it. I thought much the same way you did when i cam here but the economics of the island are more complex then i think outsiders realize. On paper it makes no sense why the west side is so depressed. It is gorgeous there, incredible beaches and lower house prices. But there are reasons why. Putting up a casino or a resort is not going to turn it around for the local poor who by and large live on the west side where the bulk of the welfare housing is. Not to mention the bulk of the working class who own their own homes and by and large to not open their arms to newcomers.
"Gentrification" is as good a real estate term as any for the turn-around that will ultimately happen to the West End of STX. Areas formerly written off because they contain poor - and the associated perception of crime, seediness and disinvestment are transformed.
It is rarely happens through the local efforts of those too close to it. "Outsiders" almost always make the initial large risk investment. Not encumbered by the bad history. It occurs when poor people occupy valuable land or property. It's no different whether it's in a city downtown, a rural area or the "bad" side a beautiful island. And the West End , in particular, has too much unoccupied spectacular land for it not to happen there.
The poor will very well remain and benefit from the positive activity that provides convenient jobs and other economic enhancements. It's really almost global development by the numbers, rather predictable. My guess is the time frame is no more than 10 years and the West End will be unrecognizable. And it will be a good thing!
My wife and I were just in STX last week looking for land. You will love it. Stay in Mount Victory Camp,. Check the website. Coldwell Bankers LanddeWilde has a good site to see available land. There is also land for sale by owner that is not listed on the MLS. some land i is located in areas that become impassable in heavy rains, and be sure there is access to electricity. Less you don't care about that amenitie. Many people raise chickens and roosters, so I wouldn't buy a place close to someone with a lot of farm animals. We stayed at one place not far from the Camp where the roosters kept us up all night.. The camp has ONE rooster. Thats acceptable. Ask Bruce, the owner of Mt. Victory Camp about land for sale,. . Buying site unseen, could give you a nice view of the oil refinery, Its pretty at night...all lit up. Thats if you get a south facing lot close to mid-island, .We had Coldwell Bankers drive us around and our agent was very helpful. Driving from Christianstead to the West End can take 45 minutes , so its best to rent a car and llocate properties on your own, since most agents have time crunches and there is a lot to check out. Since you want a rainforest property, get a map and locate the estates that are in that area. That would narrow your search considerably. A lot of homes are built on slopes, no big deal. Good luck. Rob.
Thank you everyone for your input, it is very helpful information.
We were looking into staying at the Mount Victory Camp when we do make it down for our visit. I think it would be a very nice, relaxing place to stay. Thanks for recommending that.
Of course we won't know what we are doing until we get down there and take a good look around. We don't want to buy land that we haven't seen. Everyone's advice is much appreciated and very welcome. Feel free to offer any more opinions although everything so far has given me a lot to think about and to keep in mind.