Need advice on first home, taxes, foreclosures,etc?
Question:
You are exempted from federal capital gains on $250,000 if single and $500,000 if married if you live in the home for at least two years.
If you are in the market for a fixer-upper, contact a Realtor, VA or HUD or subscribe to a foreclosure web site. There will be plenty of opportunities in the coming months with No Doc/Low Doc, 40-50 year mortgages, option ARMs, no interest loans and other products causing a real estate meltdown in overpriced markets like California, Nevada and Boston.
Unless you're an experienced builder, and even if you are, I'd recommend using an architect, contractor, engineer, or at least a home inspector to provide you with a rough estimate of the minimum required repair costs. Even if you're planning to live in the house for a couple of years, you don't want to lose money by having to spend more on the house than you can recover at resale.
Yes, there is a tax break if it is an owner occupied property, the standard tax break that everyone thinks of is the two year tax rule. If you live in a home for two years, or you have occupied a home for the last two years that was not occupied before then you and your spouse are exempt up to $500k or $250k per person. Remember to save all your receipts from the remodel/fix up costl, for they are write offs.
Please talk to your accountant, everyone has there own unique situation.
To answer you second question, foreclosures can be good and bad. Each situation is different, the best advice I can give you is to know the market well enough where you plan on investing. Just because a home has been foreclosed on does not mean it is a good deal. Pull a title report on the property you are considering. I have had clients run into federal tax liens that have killed the deal after they had initially thought they had just gotten the deal of a life time.. that is just one small example.
Best advice as a first time home buyer when buying a home,
is to factor in one weeks "take home pay." Not gross when
buying a house. The banks and lenders always tell you that
you "qualify" for more, but that's why so many people are now
forclosing on their homes. One weeks take home pay only.
And that is with your property taxes factored in.
The other Three weeks you have to pay for food, car and ins.
utitality's, enertainment, repairs, credit cards. doctors
visits, health insurance, and invest in a 401K, because when
you go to retire there will be no Social Security left. After
buying a home, Do not apply for a home equity loan in a
home you have no equity in. Your first several years all go on
the interest you are paying on the home. Do not run up your
credit card to make home improvements eather. Remenber
also Three bedroom houses sell faster than two bedroom
homes. You need to factor that in with the intention when
selling the home, and last is to get the home "inspected"
before closing. It may cost a couple hundred, but it's well
worth it, so stay away from people who tell you that:
"with a little bit of work" or "handyman special" stay away.
because when you go to sell the home, You have to sign a
forclosure statement about anything about anything wrong
with the home. Thats the law. anything in plumbing or elect.
violations not up to "code" have to be corrected before sale.
Well, you wanted some advice. Here it is for you. :-})
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