Question about re-sale property

4

4walls4me_IHB

New member
<p>Why is it prices from the builders (i.e brand new with everything modern) are the same or lower than similar re-sale homes listed on Remax and such? Am I missing something? Is because of lack of mello-roos or something?</p>

<p>Why would anyone buy an old place if they can get a new one for the same or better price?</p>

<p>Is this the Kool-aid thing or is there something I don't realize?</p>

<p>Thank you :)</p>
 
<p>Homebuilders, especially publicly traded, can be extremely agressive in their pricing. What has taken them 1 year to take the prices down 20-30% would have taken stubborn resellers 2-3 years at least to reach realization (ie. that the market is bad, that their 5% price cuts every 6 months don't mean squat, etc). </p>

<p>An owner may stubbornly hold on to property for whatever reason, but a homebuilder wants to sell the house no matter what. If it is at a loss, then it was a bad spec and so be it, but there is no point for them to hold onto it, one of the reasons of course is it will sit empty and not a single person will benefit from that. Their monthly loss is at a maximum once the house is complete as they have to begin paying the full loan amount. </p>

<p>As a public company, you have to report inventory and take write-downs after write-downs, etc. The list goes on.</p>
 
There are many costs for new home construction that will need to be factored in, landscaping costs, flooring, window coverings, sometimes appliances and other upgrades... A resale home typically (hopefully) has already absorbed those costs. I've also noticed that the mello roos and bond assessments are increasing to 1.8 to 2.0 percent versus 1.3 to 1.5 percent from earlier (older) communities. The thing I hate about these mello roos and bond assessments is that if you get hit with IRS AMT penalty then none of the property taxes are deductible, and thus don't lower your AGI. On a 1M home in Villages of Columbus (or even Portola Springs) you could get hit with 18K+ in property tax versus 14K-15K or so on a home in Quail Hill or Woodbury.



 
Clarification please. I you get hit with AMT, NONE of your property taxes are deductible ? I'm not talking mello - roos or other special assessments....just actual prop taxes.
 
AMT decreases the property tax deduction. Most Mello-Roos taxes are not deductible. Special assesments for civic improvements are not deductible. AMT has no effect on the determination of which property taxes are deductible, but it does effect the amount that is deductible.
 
Awgee,

<p>

I use Turbotax quite a bit, even to do what-if scenarios. what-if I sell my options, what impact will that have to my tax basis. What-if I upgrade and take on a larger mortgage, tax, etc.

<p>

I know that when I have been hit with AMT, that the property tax (not the mello roos or assessments) were NOT deductible. If I change the property tax deduction to ZERO my taxes owed didn't change, neither if I put in 20K in property tax, nothing because of AMT. AMT excludes nearly all taxes, like withholdings from being deducted. I really hate AMT, as the benefits of owning are home are drastically reduced. However, eligible mortgage interest is completely deductible, AMT or no AMT.
 
TurboTax is great for doing what'ifs. But, my take is all schedule A deductions are reduced due to AMT, except for the charitable donations deduction. The same deductions are also decreased for very high income earners not subject to AMT.<p>

<p>

If during a "what if" scenario, you decrease one deduction yourself, due to high income the AMT formula will just decrease the other deductions so that the tax is the same, hence the ironic name for the code, "Alternative Minimum Tax". You pay the minimum tax no matter what deductions you claim or don't claim. Lovely, eh?<p>

<p>

And the mortgage interest deduction is decreased by AMT.



At least that is my take, from memory, but I will check tomorrow to make sure.
 
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