What are Your Options Under the Temporary Rent Control and Eviction Laws in the City of Santa Cruz if You Own Rental Property in the City?
I have received numerous questions about the temporary rent ordinance in the City of Santa Cruz. While I am no expert on housing law, I am aware of one strategy that will allow rental owners to avoid relocation costs if they plan to sell or occupy the rental. Keep in mind that this is only applicable to the temporary ordinance.
Before Election Day in November, anyone with rental property in the city of Santa Cruz may give 120-day notice to tenants stating his/her/their intention to take the unit off the rental market. The proper paperwork must be filed with the City. The owner is not responsible to pay relocation expenses under the temporary ordinance, provided that the house is sold or occupied by the owner or a family member.
For those interested in avoiding recognition of capital gains in connection with the sale of a rental property, consider exchanging that property under Internal Revenue Code Section 1031. Section 1031 allows you to defer the tax consequences of selling appreciated property. The law requires that a 1031 exchange intermediary hold the net sale proceeds from your sale until you purchase your new property. The primary 1031 exchange rules and requirements include: 1) same taxpayer: the taxpayer who sells is the taxpayer who buys; 2) property identification within 45 calendar days post-closing of the first property; 3) purchase of the replacement property within 180 calendar days; 4) trading up: the price of the replacement property is equal to or greater than the old or relinquished property; 5) hold time supports the intent to hold for investment; and 6) related party transaction regulations.