Silicon Valley Real Estate

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1031 Exchange – Flipping Houses

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A 1031 exchange is used to defer taxes on the sale of your investment property when your proceeds are invested in a new investment property. Although you probably consider a house you bought with the intention of flipping to be an investment, it is not considered by the IRS to be a property that was bought for investment purposes and thus does not allow it to be used in a 1031 exchange.

Tax professionals recommend keeping an investment property obtained in a 1031 exchange for two years as a rental property. Some professionals will say that one year plus one day is sufficient for the 1031 exchange to avoid an IRS challenge.

In 2008 the IRS issued a safe harbor rule saying it would not challenge the 1031 exchange because of the sale of your replacement property if:

  1. You rent the dwelling unit to another person at a fair rental price for 14 days or more.Your personal use of the dwelling unit does not exceed the greater of 14 days or 10% of the number of days during the 12-month period that the dwelling is rented at a fair rental price. (Example: you rent it out for 332 days and use it for personal use for 33 days.)

Generally the IRS looks at your previous activity and any records relating to the use of your replacement property to decide if it was qualified to be used in a 1031 exchange.

Mountain View Row-House Development Ending?

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The Dec 10, 2020, closing of the Summerhill Homes purchase of the Meadowood Apartments may be the last redevelopment of apartment complexes in Mountain View for some time. SB 330 prevents the reduction of the number of housing units, prevents reducing the number of rent-controlled units, and requires additional tenant relocation assistance.

SummerHill Homes had obtained approval to demolish the two-story apartment building and build 115 row houses before closing the purchase. The row houses will be three and four bedroom homes ranging in size from 2,014 to 2,446 square feet.

See “Last Mountain View Row-House Development“.

Google Continues Silicon Valley Expansion

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Google has modified its plans to include 7,000 residential units for Google’s campus in north Mountain View. Google has proposed that 20% of the homes (1,400) be “affordable” homes. That is double the number of affordable homes already in Mountain View. The plans include 3.1 million square feet of office space and 265,000 square feet of local shops. Google is continuing to expand its presence in Silicon Valley.

Google was reported on Dec 14, 2020, to have notified its employees to live within commuting distance of their assigned office. They will be expected to show up three days a week. Google has delayed working-in-person until Sept 1, 2021, for its employees.

Downtown Mountain View Home Prices

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At the beginning of the Covid-19 pandemic there was speculation that urban home prices would suffer. Looking at Mountain View house prices through the end of December, 2020, there is no indication that home prices in Downtown Mountain View are affected.

Downtown Mountain View House Prices

More information about the Downtown Mountain View neighborhood, including more real estate trends and downtown attractions, is available at: Downtown Mountain View.

Multiple Counter Offer

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In Silicon Valley, multiple offers to purchase a home are often received within a short time period. A seller cannot respond to multiple offers by sending a simple counteroffer to each potential buyer. The seller needs to make a “multiple counter offer”. The seller may choose to send a “multiple counter offer” to some or all of the potential buyers.

Our local Association of Realtors has standard forms which are normally used by the seller.