IrvineRealtor_IHB
New member
thank you freedom. I stand corrected and will verify with some escrow people I know tomorrow.
Should we sell our townhouse in Pasadena before moving to Irvine?
- Thread starter jamlen_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
So I'm trying to understand this. If non-qualifying use prior to 1/1/09 is disregarded, how does this work:
I own a house that I've been renting out for 3 years (I lived in it prior to that).
This year, my tentant moves out in June and I live in it for 6 months until December and then sell it.
Does that mean I can exclude up to half of my capital gains (6mo/12mo = 1/2)?
Sorry it took so long, but I just read this thread for the first time.
By, This year, my tentant moves out ..., do you mean 2008 or 2009. If 2008, use the old confusing 2 out of 5 years rules. If 2009, use the old 2 out of 5 for all applicable time previous to 2009, and use the new confusing prorated rules for applicable 2009 time.
Don't try this yourself at home folks. Hire a tax professional, preferably an Enrolled Agent, to mess with this.
I have not read the new actual code myself yet. My favorite way of handling a situation like this is wait for a client with the situation, enter the data, try some different scenarios and see how my software handles it. And I read the code after I think I know how it works. Tax code is so awful that it helps to understand the intention and results before trying to read the gobbledygook.
Good choice Pasadena,
Just make sure you get your home up on the market ASAP. i have a real bad Panda feeling about the second half of the year. I'm talking massive, MASSIVE Cow SH$T is going to hit the fan thanks to Bernanke and all the money he is printing to save our economy! Home prices are going to tumble BIG TIME! Try to unload before June '09. That is exactly what i am trying to do. Boy, do I wish it was February 2008 again. IPO, Trojan, and IHO are already on their safety life boats peddling away from this sinking ship. You and I need to jump off this sinking Titanic Ship before it is too late.
-Good luck!
There isn't a market for recent listings at thier listed prices. There appears to be a market at $425-450. That is where the curve is. Your realtor isn't worth a spit - price it agressively, get it sold, and move on.
Not to pile on and say I told you so, you are behind the curve, and so is everyone else. You should of took the $450 and considered it lucky.
Quiz: You wake up to discover the paint peeling, the windows breaking, and pot of water in the sink boiling. Which do you fix first?
Answer - none of the above. Your house is on fire. GET OUT!
irvine_home_owner_IHB
New member
Hold.freedomCM said:
So I'm trying to understand this. If non-qualifying use prior to 1/1/09 is disregarded, how does this work:
I own a house that I've been renting out for 3 years (I lived in it prior to that).
This year, my tentant moves out in June and I live in it for 6 months until December and then sell it.
Does that mean I can exclude up to half of my capital gains (6mo/12mo = 1/2)?
freedomCM_IHB
New member
you should really talk to a cpa, i think
maybe awgee?
maybe awgee?
IrvineRealtor_IHB
New member
Following up as promised:
I spoke with 3 separate escrow companies today. Each said that they could not give me a definitive answer and that this should be answered by a CPA or tax advisor (all are smarter than me, and at least know to leave well enough alone).
(hoping that any tax pros here will chime in.)
Thx,
IR2
I spoke with 3 separate escrow companies today. Each said that they could not give me a definitive answer and that this should be answered by a CPA or tax advisor (all are smarter than me, and at least know to leave well enough alone).
(hoping that any tax pros here will chime in.)
Thx,
IR2
awgee_IHB
New member
irvine_home_owner said:
Sorry it took so long, but I just read this thread for the first time.
By, This year, my tentant moves out ..., do you mean 2008 or 2009. If 2008, use the old confusing 2 out of 5 years rules. If 2009, use the old 2 out of 5 for all applicable time previous to 2009, and use the new confusing prorated rules for applicable 2009 time.
Don't try this yourself at home folks. Hire a tax professional, preferably an Enrolled Agent, to mess with this.
I have not read the new actual code myself yet. My favorite way of handling a situation like this is wait for a client with the situation, enter the data, try some different scenarios and see how my software handles it. And I read the code after I think I know how it works. Tax code is so awful that it helps to understand the intention and results before trying to read the gobbledygook.
irvine_home_owner_IHB
New member
Sorry... I do mean 2009.
Still is confusing, that code seems like if it's anytime after 1/1/2009 that you sell, then you don't even look at the old 2 of 5... I don't think you can combine the two methods.
For example:
Let's say I owned the house from 1/1/2004 until 12/31/2009 (I'll use whole years of residency to make the math simple).
I lived in it until 12/31/05 (2 years), rented it out until 12/31/08 (3 years) and then moved back in for the final year of 2009 and sold it at the end of the year.
By the old way... I can qualify for the 2 of 5 because I lived in it during '05 and '09. By the new way, it looks like I get 0/6? Seems like ratio should be the period of qualifying use/period of ownership.
Argh.
Seems like this is less favorable because if you just did 2 of 5, you got 100% exemption... but now 2 of 5 looks like either 60% or 40% depending on what the ratio is supposed to be.
Still is confusing, that code seems like if it's anytime after 1/1/2009 that you sell, then you don't even look at the old 2 of 5... I don't think you can combine the two methods.
For example:
Let's say I owned the house from 1/1/2004 until 12/31/2009 (I'll use whole years of residency to make the math simple).
I lived in it until 12/31/05 (2 years), rented it out until 12/31/08 (3 years) and then moved back in for the final year of 2009 and sold it at the end of the year.
By the old way... I can qualify for the 2 of 5 because I lived in it during '05 and '09. By the new way, it looks like I get 0/6? Seems like ratio should be the period of qualifying use/period of ownership.
Argh.
Seems like this is less favorable because if you just did 2 of 5, you got 100% exemption... but now 2 of 5 looks like either 60% or 40% depending on what the ratio is supposed to be.
jamlen_IHB
New member
Thank you all for the insightful responses. After additional pondering and analysis we have decided to put our place up for sale. The plan is to make sure it is well staged and decluttered and priced agressively for a quick sale. We are aiming for it to hit the market in a little over a month. I will keep you all posted on how this story unfolds and hopefully be able to provide a play by play a la Ipop once it is sold.
PANDA_IHB
New member
Pasadena to Irvine said:
Good choice Pasadena,
Just make sure you get your home up on the market ASAP. i have a real bad Panda feeling about the second half of the year. I'm talking massive, MASSIVE Cow SH$T is going to hit the fan thanks to Bernanke and all the money he is printing to save our economy! Home prices are going to tumble BIG TIME! Try to unload before June '09. That is exactly what i am trying to do. Boy, do I wish it was February 2008 again. IPO, Trojan, and IHO are already on their safety life boats peddling away from this sinking ship. You and I need to jump off this sinking Titanic Ship before it is too late.
-Good luck!
jamlen_IHB
New member
I wanted to provide an update on our situation and solicit some additional feedback from the clever crew on the IHB. Our Pasadena townhouse has now been on the market for about 5 weeks. We have had terriffic traffic, probably around 10 showings per week plus a couple of open houses. We received two low-ball offers a couple of weeks ago. We are asking $499,000 for the place (which everyone I talk to agrees is a really good price for such a great location, unit and building). The offers we received were $425,000 and $450,000 and the buyers could not afford to go much higher so did not go anywhere. Other than that no additional offers to date.
An interesting piece of information is that one of the neighboring units that is a little over 200 sqft larger (with much less upgrades but a full third bedroom instead of a really nice and versatile den) just went into escrow at $580,000 two weeks ago (which at the same $/sqft would put our price a hair above $500,000). It has already cleared all contingencies so it looks like the sale is going to go through.
We are not in any financial stress and can either decide to stay in this place for several more years or rent it out and have the rent cover our costs with no problems but would rather sell and cash out plus get rid of the headache of being landlords.
I am inerested in hearing from the experts on this board if:
1 - we are overreacting to the fact that the place has been on the market for 5 weeks without a sale and that we should just give it more time
2 - you would recommend that we lower the price (if so, how much should we reduce it by)
3 - we should just give up the idea of selling and either stay or rent this place out instead
Thanks for your input!
An interesting piece of information is that one of the neighboring units that is a little over 200 sqft larger (with much less upgrades but a full third bedroom instead of a really nice and versatile den) just went into escrow at $580,000 two weeks ago (which at the same $/sqft would put our price a hair above $500,000). It has already cleared all contingencies so it looks like the sale is going to go through.
We are not in any financial stress and can either decide to stay in this place for several more years or rent it out and have the rent cover our costs with no problems but would rather sell and cash out plus get rid of the headache of being landlords.
I am inerested in hearing from the experts on this board if:
1 - we are overreacting to the fact that the place has been on the market for 5 weeks without a sale and that we should just give it more time
2 - you would recommend that we lower the price (if so, how much should we reduce it by)
3 - we should just give up the idea of selling and either stay or rent this place out instead
Thanks for your input!
Geotpf_IHB
New member
Well, it looks like it would sell for $450k. So, clearly, you aren't that far off. Maybe go halfway and lower the price to $475k? If it hasn't sold after five weeks, you aren't going to get list for it, I don't think. You might have to settle for $450k.
freedomCM_IHB
New member
what he said. lower the price to 475. take 450 if it is offered again.
did you counter offer on the 450 bid? what did they say?
did you counter offer on the 450 bid? what did they say?
graphrix_IHB
New member
You should have taken $450k when you had it. Lower the price to $450k, and pray to whatever gawd/idol/entity that you believe in that you will get an offer like that again. Just because one of the neighboring units is selling for more doesn't mean your unit should sell for that, you are selling your unit not your neighbors. Sorry to be harsh, but your unit was worth $450k when you had the offer, now it is worth whatever the next highest offer is, hopefully it is $450k. And really, if I were in your shoes, I would drop the price to $425k to maybe get a bidding war going. Sheeple are sheeple, and sheeple love to try to one up the other sheeple. That is what a 30 year veteran in the business told a major builder to do in 2005. The builder should have listened to him. They ended up selling the unit for less than what he said because they chose to chase the market down.
Have you checked foreclosure radar in your complex? I bet some of the potential buyers have.
Have you checked foreclosure radar in your complex? I bet some of the potential buyers have.
IrvineRenter_IHB
New member
This does show how the housing lottery is working right now. Prices are still too high, so there are very few buyers, but occasionally one comes along and pays too much so it gives the remaining sellers hope for a windfall.
Graphrix advice is the best; price aggressively and take what you can get. It isn't like the market is at the bottom and waiting is going to make a better offer magically appear.
Graphrix advice is the best; price aggressively and take what you can get. It isn't like the market is at the bottom and waiting is going to make a better offer magically appear.
jamlen_IHB
New member
All,
thanks for the input and feedback. We are still contemplating what our next move is and will keep you posted on our progress. We had our agent run another CMA yesterday and it showed that our current list price is supported by recent sales at the current list price (to IRs point, sales of surrounding units is no guarantee that our unit will sell). I am tempted to lower the price to $475,000 to get things hopefully moving faster. It is really amazing how fast the market is depreciating even in the exclusive areas at this point. We are in ZIP 91106 largely surrounded by million dollar houses. It would be interesting to see if someone can pull a foreclosure picture of this zip code.
Thanks again!
Pasadena
thanks for the input and feedback. We are still contemplating what our next move is and will keep you posted on our progress. We had our agent run another CMA yesterday and it showed that our current list price is supported by recent sales at the current list price (to IRs point, sales of surrounding units is no guarantee that our unit will sell). I am tempted to lower the price to $475,000 to get things hopefully moving faster. It is really amazing how fast the market is depreciating even in the exclusive areas at this point. We are in ZIP 91106 largely surrounded by million dollar houses. It would be interesting to see if someone can pull a foreclosure picture of this zip code.
Thanks again!
Pasadena
freedomCM_IHB
New member
If it really is that fast, I would suggest you lower it to $400k, and try to get a few bidders to work on the price for a week of counter-offers. then take the money and run (quickly).
garrison_IHB
New member
TI
jamlen_IHB
New member
What bothers me is that we have already priced it agressively below almost all current listings in the area and in line with current sales (some currently in escrow in this building) and our unit is more upgraded than most of the current listings. Our realtor is telling me to be patient as our unit should generate an acceptable offer but I want to make sure we don't follow the market down and of course at the same time not sell for less than we have to.
no_vaseline_IHB
New member
Pasadena to Irvine said:
There isn't a market for recent listings at thier listed prices. There appears to be a market at $425-450. That is where the curve is. Your realtor isn't worth a spit - price it agressively, get it sold, and move on.
Not to pile on and say I told you so, you are behind the curve, and so is everyone else. You should of took the $450 and considered it lucky.
Quiz: You wake up to discover the paint peeling, the windows breaking, and pot of water in the sink boiling. Which do you fix first?
Answer - none of the above. Your house is on fire. GET OUT!
usctrojanman29_IHB
New member
Price it low and create bidding war for the sheople.Pasadena to Irvine said:
jamlen_IHB
New member
All,
here is a final update to our Pasadena house selling story. We followed the advice from the experts on the blog and agressively reduced the price from $500,000 to $450,000 even though it felt like we were going to "give the place away". We received 4 offers within a couple of weeks, created a bidding war and closed escrow today at $462,000. With hind-sight being 20-20, I wish we would have listed our place really low right off the bat as I think we may have ended up selling at a higher price. All-in-all not a bad experience (the worst part of selling a house is having to keep it clean, especially with two small kids). Depositing the proceeds of $270,000 from the sale was a good feeling and will most likely help quite a bit when it is time to buy another house in a few years.
We are moving down to Irvine next week after having worked with Scott Gunther (Irvine Realtor) and secured an excellent house lease in Portola Springs. I would like to provide a huge thumbs up for Scott and recommend him to anyone that is looking for a great realtor to help meet your real estate needs. Scott - I will definitely give you a call when the Irvine housing market stabilizes and it is time to buy!
Thanks to the blog for the great advice even though it stung a little initially realizing that OUR place was not as valuable as we thought it was!
Pasadena
here is a final update to our Pasadena house selling story. We followed the advice from the experts on the blog and agressively reduced the price from $500,000 to $450,000 even though it felt like we were going to "give the place away". We received 4 offers within a couple of weeks, created a bidding war and closed escrow today at $462,000. With hind-sight being 20-20, I wish we would have listed our place really low right off the bat as I think we may have ended up selling at a higher price. All-in-all not a bad experience (the worst part of selling a house is having to keep it clean, especially with two small kids). Depositing the proceeds of $270,000 from the sale was a good feeling and will most likely help quite a bit when it is time to buy another house in a few years.
We are moving down to Irvine next week after having worked with Scott Gunther (Irvine Realtor) and secured an excellent house lease in Portola Springs. I would like to provide a huge thumbs up for Scott and recommend him to anyone that is looking for a great realtor to help meet your real estate needs. Scott - I will definitely give you a call when the Irvine housing market stabilizes and it is time to buy!
Thanks to the blog for the great advice even though it stung a little initially realizing that OUR place was not as valuable as we thought it was!
Pasadena