thinking about selling my house, need some advice.

[hoss 5,000+ posts]

oh yes, i also forgot to mention these facts:

-after buying a house at the same price as my current house, even if i dont walk away with that much extra capital after all the fees, with the lower interest rates that are currently available, i will be saving about $300/month.

-the condos im looking at are smaller in size, and also energy star rated units, which will be a large savings in utilities

-my daily commute will be GREATLY shortened, which will save on gas, if not eliminate my need to drive to/from work entirely.

all in all, i could easily save about $500 a month.

 

[squeak9798 5,000+ posts]

Keep in mind that depending on your tax bracket, the tax you owe on the gain if taxed as ordinary income may actually be higher than the capital gains tax. If prices aren't inflating quickly, it may be wise for you to wait until the 1 year mark to get into the capital gains tax bracket.

Likewise.....I hope you kept all of those receipts for the upgrades that you did to the property. All of those expenses can be deducted from your gain on the sale to reduce your tax liability.

Realtors commissions I would try to negotiate //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif They aren't set in stone. See if you can negotiate down to 4-5%. Even 1% is an extra $1800 in your pocket on a $180k sale. Or if things are moving that quickly in your area (neighbor selling within 48 hours) try selling by owner for a week or two and see if you can avoid realtor commissions all together.

And of course you'll have to pay some of the closing costs. Title insurance, half of the lender/title company's closing fee, etc etc.

 

[hoss 5,000+ posts]

Keep in mind that depending on your tax bracket, the tax you owe on the gain if taxed as ordinary income may actually be higher than the capital gains tax. If prices aren't inflating quickly, it may be wise for you to wait until the 1 year mark to get into the capital gains tax bracket.
Likewise.....I hope you kept all of those receipts for the upgrades that you did to the property. All of those expenses can be deducted from your gain on the sale to reduce your tax liability.

Realtors commissions I would try to negotiate //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif They aren't set in stone. See if you can negotiate down to 4-5%. Even 1% is an extra $1800 in your pocket on a $180k sale. Or if things are moving that quickly in your area (neighbor selling within 48 hours) try selling by owner for a week or two and see if you can avoid realtor commissions all together.

And of course you'll have to pay some of the closing costs. Title insurance, half of the lender/title company's closing fee, etc etc.

i saw you lurking and had been awaiting your advice (you havent failed me on any subjects yet //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif//content.invisioncic.com/y282845/emoticons/laugh.gif.48439b2acf2cfca21620f01e7f77d1e4.gif)

ill have to look into that first part, about the tax brackets. the second part, about deducting for upgrades, can you deduct for sweat equity? i can get receipts for the materials, but all the labor i did for myself... ive probably got about $6k in materials, and i would guess ive probably got another $3-4k in what i could charge for labor (on a guess).

i had thought about the fsbo route, and its definitly worth a shot, but ive also got access to the sales team at my work and could probably get some ones help at a reduced rate //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif . or i could just use my work resources to list my house on MLS myself (is that possible?). i figured i would have some closing costs as well, but that is all negotiable in the front end of the contract, and i will get some kickbacks from using prefered closing offices, or discounted services from work.

 

[bimma85 5,000+ posts]

You are buying in a bear market (nationally) and you will see greater returns on either house in 12-18 months than you have in the last 12-18. Basically buy low sell high, and things are as low as they are going to get, including your present home. This is obviously only my opinion, but I do live in the world of construction and housing.

Can't say I agree.

this would be another fairly short term investment for me as

Buying right is the best thing you can do. Try to find a home @ 70 cents on the dollar or less. That is what will make you money.

working in new home construction for the past two years, and studying construction management in college for 4 years before that,

That is definitely a huge plus and will be sure to save you some $.

thats good to hear about having owned it for 12 months, that means if i sell it in 4 months from now ill be clear of capital gains //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif

No, you must have owned for 12 months to get the capital gains rate. You must have occupied the home 2 out of the last 5 years(iirc), to be exempt from taxes all together.

 

[hoss 5,000+ posts]

i guess im still confused about the whole tax situation bimma. ive owned the home, and occupied it ever since i closed on it in april of 07 (about 8 months ago).

now you can dumb it down for me lol. what do i need to do to put myself in the best situation (capital gains or sales tax). taxes always confuse me. the hardest thing i have ever had to do for any job is fill out a W2 lol.

 

[bimma85 5,000+ posts]

ill have to look into that first part, about the tax brackets. the second part, about deducting for upgrades, can you deduct for sweat equity? i can get receipts for the materials, but all the labor i did for myself... ive probably got about $6k in materials, and i would guess ive probably got another $3-4k in what i could charge for labor (on a guess).

You would probably (I'm no accountant, so can't say for sure.)have to report the 3k-4k as income and have it taxed normally. That would cost you more than having it taxed as capital gains.

BTW if you truly want to know your best options. There are two places listed in charlotte that should be full of people that know your market quite well.....

http://www.reiclub.com/real-estate-clubs/North%20Carolina.html

 

[bimma85 5,000+ posts]

i guess im still confused about the whole tax situation bimma. ive owned the home, and occupied it ever since i closed on it in april of 07 (about 8 months ago).
now you can dumb it down for me lol. what do i need to do to put myself in the best situation (capital gains or sales tax). taxes always confuse me. the hardest thing i have ever had to do for any job is fill out a W2 lol.

"Generally, appreciated capital assets that are sold by an individual after being held more than one year (long-term capital gain) will be taxed at a maximum rate of 15%. For taxpayers earning less than $15,000 annually the tax rate on long-term capital gains is only 5% and will be 0% after 2008."

"A capital gain on the sale of a principal residence is afforded special treatment for Federal income tax purposes. Married sellers of a principal residence may generally exclude up to $500,000 of gain ($250,000 of gain in the case of single individuals) from gross income, provided the real estate was used as the sellers' primary residence for at least two years during the five year period ending with the date of the sale."

http://en.wikipedia.org/wiki/Capital_gain

Hopefully that will make it easier. Pretty much 1 year to 2years=more than likely 15%. 2 years+ = no taxes

 

[hoss 5,000+ posts]

i might have to check out a meeting of one of those clubs //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif

thanks bimma, anyone else got any useful tax/tax evasion tips?

 

[hoss 5,000+ posts]

so after a bit more consideration, and looking at some comps in my neighborhood, it looks like the last few sales have been anywhere from 143k (my neighbors two doors down, a two bedroom corner unit, purchased about a month before i bought), to 160k for another two bedroom unit in my neighborhood bought 4 months ago (mine is also a 2 bedroom unit, so this is a good comparison for a comp, at least i think //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif ).

and after deducting all of my home upgrade materials cost, factoring in a 5% realtor fee (which i think i might be able to do better than that trying FSBO and listing it on MLS myself), if i think i might be able to walk away with $7-10k after capital gains //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif . and im starting to think this might be a viable option //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif

can anyone see anything i might be missing or overlooking? btw, my calculations were based on selling it at $160k ($8k realtor fee, [160k-8k]-144900 = 7100, which is roughly the value of the materials that i added to the house, so that would cover the capital gains tax).

 

[cpierce 5,000+ posts]

Dooo it, you know you want to //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif

 

[Flipx99 5,000+ posts]

capital gains for sure...i do believe you must live there for 2 years in order to avoid these.

this is correct.

 

[Flipx99 5,000+ posts]

Otherwise, most of the information is pretty factual.

I only advice is never be afraid of the tax man in the quest for wealth.

 

[hoss 5,000+ posts]

well, awesome //content.invisioncic.com/y282845/emoticons/woot.gif.aaa6090e619a97b6090d16dd863c5a69.gif

i guess the only thing left to do is find a new place to buy, and get a contract on contingency //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif . another good thing to know (which i was actually somewhat unaware of until today), is that apparently our market is currently flooded with condo's. so that lends itself to being a huge bargaining chip for me when looking to buy the new place //content.invisioncic.com/y282845/emoticons/woot.gif.aaa6090e619a97b6090d16dd863c5a69.gif

 

[squeak9798 5,000+ posts]

can anyone see anything i might be missing or overlooking? btw, my calculations were based on selling it at $160k ($8k realtor fee, [160k-8k]-144900 = 7100, which is roughly the value of the materials that i added to the house, so that would cover the capital gains tax).

The only thing I see you are missing is closing costs/tax proration, which could be as little as $500 or could be a couple grand depending on how things work in your area and associated costs. Though this is something a realtor (or someone otherwise familiar with the typical seller-paid fees) would be able to advise you on. And it's also something negotiable in the contract //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif

 

[azbass 5,000+ posts]

ask for a lot of moniez //content.invisioncic.com/y282845/emoticons/smile.gif.1ebc41e1811405b213edfc4622c41e27.gif