How to Protect Your Capital Gains with Opportunity Zone Investing

How to Protect Your Capital Gains with Opportunity Zone Investments

If you sold your property within the last 180 days, you can reinvest that capital gain and defer and reduce the tax you’ll have to pay at filing time. If the income results from the sale of assets in a partnership filing K-1, the 180 days runs from the end of the calendar year.

In this article, we’ll give you a concise overview of what opportunity zones are, how to get started investing, and why and how you might want to create your own qualified opportunity zone investment fund (QOF).

What Are Opportunity Zones? How Do They Protect My Capital Gains?

If you’ve recently realized capital gains (made a profit) from the sale or transfer of personal or partnership assets and you’re facing the payment of a large tax liability to the IRS – current capital gains taxes range as high as 20% depending on your income– opportunity zones allow you to put off or defer paying taxes as long as the investment is held in the QOF.

The Tax Cuts and Jobs Act of 2017 (TCJA) created the opportunity zone program to provide a financial incentive to investors for allocating capital to economically disadvantaged communities. The Act created more than 8700 designated qualified opportunity zones (QOZs)

What exactly are the benefits of investing in opportunity zones?

  • You can earn strong returns and pay no more than the original deferred tax (reduced by incremental step-ups in basis).
  • 10% step-up in basis after 5 years. Pay tax on only 90% of original gain.
  • 15% step-up in basis after 7 years. Pay tax on only 85% of original gain.
  • Complete elimination of tax on post-investment capital gains after 10 years.
  • Pay tax on only 85% of original gain if held more than ten years. No tax on subsequent gain.
  • You can invest in business or real estate assets.

Investing in opportunity zones allows you to protect your retirement and heir’s inheritance from excessive taxation by the federal government.

If you’re willing to commit to a 10-year investment, you can reduce your tax basis by 15%, and pay no capital gains tax on any new gain.

How Do I Get Started Investing in Opportunity Zones?

The first consideration is finding a QOF. Per the TCJA, QOZ investments must be made through a QOF.

There are two ways to approach this: you can either invest with an existing QOF or create your own by self-certifying with the IRS using form 8996.

Working with an existing QOF is a good choice if you’re looking for professionally-managed investments that won’t require you to be personally involved in property or asset management.

If you want more control over your money and investments, it’s not too difficult to self-certify as a QOF.

Now, the list of qualifications/requirements is a bit intimidating, but here’s a brief summary­–consult an investment advisor and accountant:

  • 90% of the funds assets must be held in opportunity zones.
  • Eligible entities include corporations, partnerships, and LLCs (those treated as a partnership or corp for tax purposes).
  • Self-certify with form 8996. No application or approval requirement.
  • QOF assets must be placed into service in a QOZ for the first time by the QOF, or
  • Be ‘substantially’ improved within 30 months.

Tips For Aspiring and Professional Opportunity Zone Investors

If you have capital gains to reinvest and the tax benefits are something that fit your financial and tax needs, you’ll need to proceed with caution before making a pledge.

Take care in researching, interviewing, and reviewing the offering memorandums of the QOFs you consider. Select a fund that specializes in the types of assets in which you’re most interested and that has a track record in QOZ investments or business and real estate development.

Creating your own QOF sound most appealing? Do your homework, evaluate your relevant experience, skills, and enlist the counsel and aid of real estate, legal, finance and other associated professionals to lend capability and credibility to your team.

Finally, inclusion in an opportunity zone doesn’t mean a great investment. Evaluate the market based on population growth, rental rate trends, quality educational institutions, strength of industry, zoning policy, and numerous other economic, regulatory, and social considerations.

Once you find a property or investment, conduct the same due diligence in assessing its condition, cash flow, and functional utility (livability and usefulness for modern buyers). Depending on the QOF, you can invest in an individual property or portfolio of units.

Time is of the Essence

Take action now to research your options if you need capital gains tax relief. You have a limited period from when gains are realized until they must be contributed to qualify for the tax-deferral benefits.

Depending on your background and how involved you want to be in the investment, you can either invest in an existing QOF or start your own and self-certify with the IRS.

Whichever path you choose, do your due diligence and select an investment based on the factors that you would consider for any traditional opportunity. When you choose a QOZ investment in a market with strong rental demand, favorable local policy, and economic growth, you’ll have a stable-return asset that shelters your existing and long-term gain.

0 Comments/by

Why a Home Inspection Matters for Buyers and Sellers

Why a Home Inspection Matters for Buyers and Sellers

Buying or selling a house is an expensive procedure during which time is of the essence. Some buyers and sellers skip the home inspection process to save time and money. However, doing so as a buyer or seller puts you at risk of spending more time to close and more money in the long run. Although a home inspection is not mandatory, it is recommended you hire a reputable home inspector before putting your house on the market, or as soon as your offer is accepted.

Preemptive action and learning as much as possible about the condition of the property protects you as a buyer or seller, and gives you the needed information to determine an appropriate value. Below is your guide to the benefits of an early home inspection.

Due Diligence Provides an Advantage

The principle of caveat emptor governs the sale of any real property: it is the buyer’s responsibility to ensure that the house he or she is purchasing is free of defects, as the seller will not be held responsible for any repairs after closing. However, the seller is legally obligated to disclose any health and safety issues on the property, including the presence of lead paint or pest, any drainage issues, etc. A home or pre-listing inspection helps buyers and sellers fulfill their duties.

Home inspectors identify safety matters rather than cosmetic issues. They focus on water damage, structural defects, and the condition of the visible features of the property (roof, windows, doors, etc.) as well as the house’s operating systems such as HVAC, electrical, and plumbing. They also observe any signs of pest infestation; however, home inspectors do not cover areas that are inaccessible—septic tanks, wells, the inside of the walls, etc. It is also worth noting that the length and cost of the home inspection depends on the size of the house, and the home inspector will provide a report afterward detailing his or her observations.

Although home buyers can waive the home inspection contingency⁠ (a clause that gives the buyer the right to have the home inspected within a specified period) in their offer, they may expose themselves to financial risk that could persist for as long as they own the house. Besides warning you of the repairs that are needed immediately, a home inspection allows you to plan ahead since you will have a clearer idea of the useful life left in crucial elements of the building. A home inspection report is also your last opportunity to renegotiate the price of the house if any unexpected repairs come up and to walk away from the transaction if needed.

Moreover, buyers are not the only ones who should invest in a home inspection. The weeks leading to a home inspection can be tenuous for both the buyers and the sellers, especially sellers who are in the process of purchasing another property themselves and are eager to move on with their lives.

One of the most effective business decisions sellers can make is the pre-listing inspection. Pre-listing inspections are an excellent marketing tool to target buyers who would like to close rapidly. Buyers are still likely to order their own home inspection, but a pre-inspected house gives them the confidence that it is unlikely that any significant issue will arise during the closing process.

Home Inspections May Determine the Sale Price of a Property

Knowledge is power. With a home inspection report in hand, both buyers and sellers are in a better position to renegotiate the terms of the contract if necessary.

If you are in the process of buying a house, an advance home inspection report that reveals any important issues can help you get a better deal on the property. In many cases, homeowners are willing to work with you on the price—within reasonable limits—to avoid putting the house back on the market. The specifics depend on the scope of the work to accomplish, on whether you are in a buyer or a seller market, etc. You can reach an agreement with the sellers by offering a lower price on the property, sharing the costs of the repairs with the sellers, asking for credit to be put towards the repairs, or demanding the completion of necessary repairs before the closing. If you have a home inspection contingency clause, you are free to walk away if you are not willing to accept the seller’s counter offer.

A pre-inspection is also a great negotiation instrument for the homeowners. Awareness of the potential complications before listing a property allows you to decide on a pricing strategy and whether you want to take care of the repairs before putting the house on the market, price it lower to sell it as-is, or offer potential buyers a credit towards the repairs. By providing your own report, you are also in a better position to counter offer if you find the requests of the potential buyer too demanding.

If an agreement is not reached with the buyer while the property is under contract, lengthy negotiations could cause you to miss the peak buying season. Additionally, when a property goes back on the market, it raises red flags for the next buyers who may be wary of any issues revealed by previous buyers, resulting in fewer and lower offers.

Significant Problems Identified During a Home Inspection? Here is What to Do

When a deal falls through after a home inspection, property owners can be at a loss. Properties are penalized when they go back on the market after being under contract for an extended time, and many potential buyers will ask themselves what caused previous house hunters to drop their offer at the last minute. In a seasonal market like Massachusetts’, having your property sit could cause you to miss the prime selling season when houses typically sell faster and for a higher price.

Once major issues are identified, the homeowner may need to drastically drop the price of the building to sell it as-is and hope that a buyer is willing to accept the risk and challenge. This scenario excludes many buyers that are looking for a move-in ready property or need the house to be in good shape to obtain financing. The other option is to proceed with the repairs, which can be expensive and time-consuming.

If you want to sell your property quickly without spending more money in the process, it is worth investigating selling directly to an investor like BostonBD Seller Solutions. Contact us today to see how we can help you sell your house fast at no extra cost for you even after a hair-raising home inspection.

0 Comments/by

Home Improvement Projects for Max Resale Value: Get Your Money Back

Home Improvement Projects for Max Resale Value: Get Your Money Back

Most homeowners have grand projects in mind for their homes; from shiny new bathrooms to additional finished space, there are many ways to turn an average house into your dream one. However, when the time inevitably comes to sell, many are disappointed when they find out that the costly projects they completed added little to no value to their property. When it comes to investing your hard-earned money into your house, it’s always a good idea to keep in mind which home improvements are the most likely to help when it comes time to sell.

Since not all home updates are created equal, we collected renovation projects that have the most attractive return on investment and are most likely to improve your resale value.

First Impression Is Priceless

When describing their dream home, a good number of homeowners tend to focus on the inside: granite countertops and stainless appliances in the kitchen, bedrooms on the same floor, lots of light, and so on. It seems logical to adopt their approach since you will spend most of your time at home indoors. However, when it comes to resale value, the importance of curb appeal takes on a new dimension. Usually, potential buyers drive by the properties they are interested in before deciding to visit it or not. House hunters immediately eliminate houses with a neglected exterior from their short-list.

Therefore, it’s not surprising to see that some of the home improvement projects with the highest return on investment (ROI) focus on the curb appeal of the property. Every year, Remodeling produces a study comparing the average cost of 22 remodeling projects with the value those projects retain at resale in 136 U.S. markets, taking into account the price range and the geographic location of the property. According to the 2019 report, you can recoup 97.5% of your money by upgrading your garage door. Updating the outside of your house by adding manufactured stone veneer elements will also help with the resale of your home, and you could regain nearly 95% of your renovation costs. Replacing your entry door with a steel model is also a good investment: you could recover almost 75% of your investment when selling the house. Although not accounted for in the report, regular yard maintenance—such as a recently mowed lawn, some flowers, and freshly-spread mulch—goes a long way to add curb appeal to your house at a minimal cost.

A lot of buyers put outdoor entertainment spaces high up on their wish lists. Hence, it is no surprise that you can recoup 75.6% of the cost of a wood deck, at resale. In comparison, composite decks and backyard patios, which serve the same function but are more expensive to build, have a cost-to-value ratio of 69.1% and 55.2% respectively.

Less Is More: A Sensible Rule for Home Improvement Projects

When starting a major renovation project (for example, remodeling a kitchen or a bathroom), many homeowners are tempted to go all-in and achieve their ‘Pinterest-fueled’ dreams of high-end finishes. However, if you plan to sell your house in the next couple of years and want to get the most bang for your bucks, you are better off sticking with smaller upgrades rather than a significant remodeling.

Kitchens and bathrooms are often selling points for homebuyers. To achieve a modern appearance that will make your house stand out without breaking the bank, you should consider some or all of the following for your home: a fresh coat of paint, new energy-efficient appliances, updated hardware, and midrange countertops. Minor kitchen remodels can help you recover over 80% of your investment compared to a major kitchen remodel, which has a cost-to-value ratio of 62.1%.

Also worth mentioning is how deferred maintenance may scare off buyers who are worried about the potential cost of significant repairs, including roof and siding. Besides, some of these maintenance issues can also harm an owner’s chance of benefitting from certain types of government-backed financing: VA, FHA, etc. Staying on top of house repairs may not be as glamorous as marble countertops, but it is a good use of your money. New windows have a cost-to-value ratio of 73.4% to 70.8%—depending on whether they are vinyl or wood—and you can recoup 75.6% of the price on vinyl siding replacement. Due to the overall cost of the project, replacing a metal roof has a cost-to-value ratio of 60.9%. Since metal roofs have a life expectancy of 50 years or longer, it may not be the best use of your money if you are planning on selling your property. On the other hand, you can salvage, at resale, close to 70% of the cost of an asphalt shingle roof replacement.

Home Improvement Projects You Should Avoid

It is possible to get carried away when renovating a house. As a result, many homeowners are surprised to find out that projects they thought would be an excellent investment are of little interest to likely homebuyers. When considering resale value, a good rule of thumb is to compare your property to the ones in the same neighborhood.

The worst home improvement projects for resale are the ones that make the house appear too fancy relative to the rest of your target market. If you over-improve your house by adding elements that are out of the price range of potential buyers—marble countertops in a midrange home, for example—you’ll be hard pressed to find a buyer willing to pay more money for something that is not a priority for him or her. Conversely, if all the other houses in your neighborhood have an element that your home is missing (e.g., an extra bathroom or bedroom), prospective homebuyers may choose a different property instead. High-end projects and extensive remodels tend to have a lower cost-to-value ratio than their lower-end, smaller-scale counterparts since these posh projects are more expensive. For instance, the cost-to-value ratio of a major kitchen remodel is 62.1%, while a minor one is 80.5%.

Another mistake you could make as a homeowner who intends to sell their house in the next couple of years is to spend too much money ‘personalizing’ your house. If a feature only appeals to a limited market, your chances of recouping the expenses of your home improvements are low. For example, the cost-to-value ratio of a universal design bathroom remodel (accessible to people with a handicap) is 62.5%. Another extravagant and impractical investment are swimming pools: they are expensive to build and maintain—although some may feel like they cannot live without one, it is a hassles and liability for others.

Improve Your House or Not? A Simple Guide

The bottom line of any home improvement project when it comes to resale is that you will rarely redeem 100% of your outlay. Some factors are entirely out of your hands, like the overall market trend: as the market slows down, so does the ROI of any home renovation.

A good rule of thumb when deciding whether to enhance your house is to consider how long you are planning to reside there. If you intend to inhabit it for many years and improving it will help you live better and stay longer, then you should proceed without necessarily prioritizing how much of your money you will get back during resale. Nevertheless, if you are considering selling your house within the next couple of years, you are better off keeping repairs to a minimum.

If you need to sell your house as quickly as possible and are not interested in expending more money on it, it is worth exploring selling it ‘as-is’ to a local investment company for a quick and hassle-free closing.

When buying a house, what are the improvements at the top of your wish list? What are the ones that will make you reconsider purchasing a property?

0 Comments/by

How to Sell Your Home Quickly During a Divorce Procedure in Massachusetts

How to Sell Your Home Quickly During a Divorce Procedure in Massachusetts

Divorce and selling a house are both emotionally charged events. When both are combined, it can be overwhelming. For many couples, the marital home is their largest shared asset. Between the memories they created together and the financial and emotional burden the home constitutes, most people choose to sell the house so that they can move on with their life. However, there are a few questions you should consider before putting your home on the market during a divorce process.

Should You Keep the House During a Divorce Procedure?

One of the first things people think about when considering a divorce is “what should we do with the house?” Many times, one of the spouses will move out while the other remains behind, but it is not always a long-term solution.

If children under 18 are involved, one of the parties will often consider staying to help the children with the transition. If this happens, the person remaining in the house will need to buy out the other by refinancing the mortgage and putting it in his or her name only. It implies that the spouse staying in the house should be able to solely support the house financially. If like most people, you purchased your home by combining your revenues with your partner’s, it might not be feasible for either of you to buy each other out. Also, some couples cannot agree on who should keep the house and who should move out.

Consequently, many people prefer to sell the house instead, which allows them to start their new life with the financial help from the proceeds of the sale and also affords them a clean break with less financial complications to sort out. If you subscribe to this approach, you must then decide whether to sell the house first or divorce first. In most cases, it is better to sell your home before a divorce than after: as a married couple, you are eligible for up to a $500,000 tax exclusion on your capital gain, versus $250,000 if you were to file separately. Besides, if you are on the market for a new home, you may have issues getting approved for a mortgage or a rental while still listed jointly on the mortgage of the marital home. However, the right time to sell your property will also depend on the real estate market. In some cases, it might be better to wait and find a way to make it work in the meantime. A divorce lawyer or counselor may be able to help you deal with the particulars of your situation.

Divorces are notorious for being fiery events, and conflicts often arise. Most couples manage to resolve the issue of keeping the house or otherwise. Occasionally, one of the spouses may firmly refuse to sell it. In this case, the court may need to intervene to force one of the parties to sell the house. It can be a lengthy, expensive, and stressful process, so a partition lawsuit should only be used as a last resort.

How Can You Sell Your House during a Divorce Procedure?

If you have settled on selling the house, you may be in a hurry to get rid of it as soon as possible so that you can get closure on this chapter of your life. However, you will need to decide with your spouse on the same details you will have to agree on during a regular house sale. If you cannot reach an agreement on whom to hire as a real estate agent, your divorce lawyer or mediator may be able to recommend one. You will also need to figure out the market value of the house.

Since the marital home is, in most cases, the largest shared asset of a couple, it is often a source of conflict. During most divorce processes, the judge may require a divorce appraisal to establish the fair market value of the house and decide on the repartition of assets. You may be able to use this appraisal to determine the listing price, or you can hire a real estate appraiser who will act as a neutral third-party to give you the best estimate of value.

Putting your house on the market is always stressful, and it is even more so when dealing with a divorce. Getting the house showing-ready often takes time and money, especially if you or your spouse still lives there or if the house suffers from deferred maintenance. You will also need to work together to figure out what is the best course of action required to make the house presentable and in sellable condition. Hiring someone to stage the property can help, particularly if one of you moved out while taking their furniture.

You will also have to jointly decide which offer to accept when the time comes. It can be difficult to put emotions aside, but a good real estate agent familiar with divorce procedures can be a valuable asset. If there are any tensions, it might be best to employ a divorce mediator or divorce attorneys to communicate and ensure that the process goes as smoothly as possible.

What Are the Financial Implications of Selling Your House During a Divorce Procedure?

Once the house is finally sold, you will need to divide the proceeds of the sale of the home so that you can both move beyond this event. In Massachusetts, the division of marital property is made equitably, not equally, depending on factors such as the length of the marriage, age, health of the spouses, and past, current, and future income earning potential of each spouse. The judge will consider, and likely approve, any division of the assets that the couple establishes on their own, as long as it is fair.

Selling your house can be a long and expensive affair, depending on the market. If the home sits on the market for a long time—or if it needs significant repairs—the couple will have to agree on how to face these added expenses. Although there is no single fit-all solution, a divorce mediator or a divorce attorney can help them figure out who will pay for what. Generally, the spouses will either share all the approved expenses, or one of the parties will put the money up front and be reimbursed with the proceeds from the sale of the house.

What Is the Quickest Way to Sell Your House During a Divorce Procedure?

Putting your home up for sale is always an emotional turmoil. If you are engaged in a divorce, it can be a nerve-wracking process. With time often being of the essence and you and your spouse eager to move on and needing cash after a costly procedure, it is a good idea to investigate selling your property to an investment firm like Boston Sellers Solutions to avoid dealing with the added stress of showing and real estate proceedings. Armed with a solid and reliable offer, you will be able to proceed to that next chapter of your life.

0 Comments/by

Should I Sell My House or Turn It into a Rental Property?

Should I Sell My House or Turn It into a Rental Property?

Sometimes, a homeowner can choose whether to sell a single-family residence or keep it for rental income. This option often presents itself to an owner who has saved enough cash to use as a down payment for a new primary residence. Also, this decision-making predicament is typical of someone who has inherited a house, has purchased a building for a child’s college years, or is relocating temporarily. Every one of these choices is viable under different circumstances; a homeowner who considers all the associating factors of each option will more likely reach the best conclusion.

Legal and Financial Considerations: Your Key to Navigating the Slippery Road of Rental or Occupancy

Local zoning laws and covenants occasionally prohibit rental of single-family residences. Check the local zoning authority and homeowners’ association to confirm that your rental is permitted. Mortgages on single-family residences often require the borrower to be the principal resident of a home. This will require an owner to have either paid off existing loans or work with the lender to modify the terms of those loans.

Using a house as a rental property is a form of investment. A wise investor compares a house rental with other investments to determine whether rental generates the greatest return. Return on investment usually includes both net cash flow and change in equity: a house’s resale value determines equity change. So, an investor also needs to research the housing market to know if their house is likely to increase in value over time.

Investors also consider the tax implications of renting out a house. Normal expenses—such as repair, maintenance, real estate taxes, and leasing costs—can be deducted from rents, resulting in a lower taxable income. The costs of acquiring and improving a house can be also be subtracted from taxable income by using a depreciation process. But a homeowner’s standard exemption from capital gains taxes is not allowed for rental property.

Practical and Management Factors

Renting out a house is an active (rather than passive) investment. That means the owner must deal with leasing, management, and maintenance concerns. The owner will not only have the time and ability to take care of these issues, but they must also set aside some money for scheduled maintenance or unexpected emergencies.

The landlord role can be daunting and aggravating; if a house owner instead opts to pay for professional management, that cost will substantially reduce net income flow. Risk for a rental house investment can also be relatively high. Tenants may damage the property, leave without paying rent, or require eviction. Liability insurance can offset some of these risks as well as relieve the owner of any responsibility should a tenant be injured in the rental house.

A Third Option: Providing Seller Financing

An alternative way of generating cash flow while avoiding the complications of rental is to sell a house and provide the financing for part or all of the sale price. Again, if there is still a mortgage on the house, the original loan may not allow owner financing. Even when owner financing is permitted, the original loan is primary, meaning the lender has first right to repayment; the owner-lender becomes secondary or junior. Therefore, if a buyer defaults, the first owner is still responsible for mortgage payments, and the house still is collateral for the original loan. Besides that, providing owner financing does carry some tax benefits. Income tax applies only to the interest portion of loan payments and capital gains taxes are spread over the life of the loan.

There are certain financial insecurities associated with providing owner financing. The buyer-borrower could default on the loan. Most borrowers do not remain in homes for the regular financing periods of 20 to 30 years, suggesting that the original owner will require a balloon payment upon resale. Professional legal and accounting services are necessary for the owner-lender to ensure safety and maximum investment returns.

Research, Then Decide: Equip Yourself with Market Information before Investing

A variety of factors will influence a home owner’s decision to sell or rent out their house. Rental must be permitted under local zoning laws and covenant restrictions. The existing loan on a primary residence will likely prohibit rental use. Rental might be dependent on free and straightforward ownership or available commercial financing. Once in a while, other investments out-perform rental houses: a homeowner should thoroughly investigate the rental market, probable expenses, and potential rental income, and compare the net income to competing investments. Part of the total investment income will be the eventual resale proceeds from a house. In a stagnant or declining market, those proceeds may be minimal. Managing rental property requires time, resources, and resilience. A possible alternative is selling the property with owner financing to generate an income stream with much less active owner involvement, yet with tax benefits.

0 Comments/by

Resolution for the New Year: Grow Your Property Value

Resolution for the New Year: Grow Your Property Value

The start of a new year is the perfect time for actions that will increase your property’s market value. Real estate sales activity slows and many improvement projects must be postponed during the winter months. Income tax season is just starting, and both buyers and sellers are planning for the coming spring. Here are four simple strategies that can increase your property’s resale value.

Organize Ownership Expenses

Keep a detailed record of your property’s annual expenses even if you don’t rent the property. Prospective buyers will appreciate your having an expense history ready for their review. If you do receive rental income from your property, you’ll need to have expenses itemized every year for your income tax return.

The IRS specifies which expenses you can deduct for rental properties. These generally include expenses to own and maintain the property, such as real estate taxes, repairs, management fees, utilities, insurance and supplies. Taking all allowed deductions may reduce an owner’s income taxes, making the property that much more attractive for resale.

There are many ways to organize your expense records. It can be as simple as keeping a file folder and handwritten ledger. You can create a simple spreadsheet in Excel or Apple Numbers. It’s possible to use personal accounting or small business software, such as Microsoft Money or QuickBooks, to record expenses. Or you can purchase specialized property management software. Whatever method you use, be consistent and to keep all receipts to prove your expenditures.

Check Up on Your Real Estate Assessment

Another way to make your property more saleable is to be sure that your property taxes are fair and comparable to those of other properties. Review the assessor’s description of your property to verify that you’re not being taxed for features your property doesn’t have.

You can compare your property taxes with those for similar properties by researching tax records kept by your local treasurer or tax collector. You can use this public record information to your advantage.

Have all your research materials organized and ready when the next assessment/tax notices arrive. The faster you address any issues, the easier it will be to work with local authorities to reduce your tax burden.

Consider Improvement Projects to Boost Property Value

Winter months are a great time to plan improvement projects. First, be sure the basics are covered. Look at your property as if you were a potential buyer. Is the property clean? Are touch-ups, like painting, needed? Is the landscaping tidy? Are there minor repairs to be done?

For bigger projects, like remodeling or new construction, keep in mind that what you spend may not be totally recovered in a resale price. Buyers value some improvements over others, and buyer trends change over time. Sources like Consumer Reports and Realtor.com publish articles every year to report which improvements add the most value.

Keep in mind that buyers may not share your taste when it comes to style, materials and color. For investment purposes, the most valuable improvements are those that are mainstream. If you absolutely want something out of the ordinary, know that your enjoyment of that feature will be part of your pay-back, rather than increased sale price.

Shop the Competition

A surefire way to ensure your property’s marketability is to compare it with others that are listed for sale. Be on the lookout for “for sale” signs in your neighborhood. Review local publications and flyers for houses for listings. You can verify actual sale prices through your assessor or clerk/recorder. Sale transactions are also public record.

Do visit open houses in your neighborhood. Professional real estate agents know that prospective buyers often are friends or relatives of neighbors. Talking to an agent might gain you some valuable information about the market for your property. The agent will see you as a possible future listing client. Pay careful attention to features in a listed property: these can suggest which would be the best improvement projects for your property.

Conclusion

An accurate history of property expenses can both reduce income taxes and help future buyers. Reduce your ownership costs by making sure that your property is assessed and taxed fairly. Plan improvement projects now. Be sure the property is clean, fresh and in good repair. If you’re considering a major improvement project, will it bring you an equitable return on its cost? Keep an eye on the market for your property. Take note of “for sale” signs in your neighborhood, as well as listings from local brokers. Visit open houses in your neighborhood: how does your property compare? Together, these strategies can earn you a higher sale price when you’re ready to sell.

0 Comments/by

Selling an Inherited Home Without the Stress

Selling an Inherited Home Without the Stress

Inheriting a home and not sure what to do? Do you keep it, sell it? It’s a tough decision that can often be an emotional one as we deal with the loss of our loved one.

If you’re still going through the probate process, or other issues involved with transferring an inherited property, then you know the stress associated with dealing with attorneys, court officials, real estate agents, and buyers.

Keeping It or Selling It

If it’s the home you grew up in and there’s a lot of memories that you’re not willing to let go of, you may decide to keep the property. If you do, what are your options?

You can choose to move in and occupy yourself, or you can rent it out for a sufficient amount to cover any existing mortgages, insurance expense, property taxes and maintenance expenses. Renting is great if you don’t mind the management duties or additional liability of rental property ownership.

Selling can also be beneficial as it will allow you to quickly move on with other aspects of your life. The additional funds can be used to pay off another mortgage, renovate, travel, or fund the education of a child or grandchild.

Tax Concerns

Fortunately, there are some good tax strategies that can help you avoid paying excessive taxes if you decide to resell your inherited property. If you decide to keep it for the short term, you can move in and occupy the property for two years to earn the capital gains tax exemption for primary residences. The exemption allows homeowners to reduce the taxable amount of the sale by $250k for individuals and $500k for married couples.

Even if you decide not to make the property your primary residence, you still have some protection from taxes thanks to the IRS’s stepped-up tax basis rules for inherited properties. When you choose to sell the property, your tax basis will be the market value at the time of the prior owner’s death. For example, if you decide to sell the house in two years for $320,000, and the property was appraised at $300,000 when you inherited it, you’ll only have to pay taxes on the difference of $20k.

Choosing to Sell

If you’re ready to sell, and you’re not looking forward to putting the property on the market, dealing with nosy buyers, or dealing with any of the stress and hardship surrounding selling the property, there are some very effective strategies to get it sold quickly and allow you to move on with your life. We can make you a cash offer with very few contingencies that will be fair and practical and make the decision to sell easy and stress free. Unlike the conventional selling approach with an agent, we pay all the closing costs so you pay nothing out of pocket.

As many homes that are inherited tend to have, there may be repair and modernization issues that need to be addressed. When you accept an offer from us, you don’t have to make any repairs, deal with any cleaning, or worry about functional and cosmetic upgrades. We’ve designed our closing process to make it as convenient and inexpensive as possible to sell your home. Please reach out to us today by phone, email or text to find out home much you could receive for your property, or click here to request an offer online.

0 Comments/by

4 Tips for Selling Your Home During the Fall Season?

4 Tips for Selling Your Home During the Fall Season?

Selling your home during the Fall season is always a challenge. Homeowners are moving around less and there’s generally less demand for housing during this time of year. This can mean longer than usual marketing times and lower sales prices. The market situation can also give buyers the advantage in negotiations.

What can you do to get the best value, despite these obstacles? Read on to learn more.

Check the Roof and Insulation

First and foremost, check the roof for leaks. If you know it leaks, get it fixed. Don’t wait or try to hide the issues. Home inspectors are very astute and will discover most water damage issues, and even if they don’t, you don’t want any legal conflicts with the buyer after closing. Due to the high cost of such repairs and the inconvenience and stress they cause, it’s critical to handle any issues with the roof before listing. If there’s a chance that your buyer’s loan may be funded with FHA, the property may not be approved if it has roof or other safety issues.

If you’re lucky enough to find a good buyer, you’ll want to take every measure not to lose the transaction. Even though you can remedy some of these things after the fact, delays in escrow while repairs are made can cause uncertainty in the buyer’s mind and lead to an increased risk of a rightful breach by the buyer.

Serious About Selling Your Home? Get it Inspected.

If you’re serious about getting it sold this Fall, pick up the phone and call for a home inspection. A home inspection is relatively inexpensive and doesn’t need to be paid out-of-pocket. An inspector will help you identify all the major and less-pressing maintenance issues that will improve marketability and minimize problems in escrow. They’ll also point out safety problems that will interfere with underwriting approval and certification by FHA or other insurers.

Before and after the inspection, consider including a home warranty in the sale of your home. With no upfront costs, you can reduce your legal risk significantly and eliminate any future headaches after closing when the buyer calls to complain about the heater malfunctioning or faulty ground wiring in the living room (buyers don’t like it when they can’t watch TV after moving in…been there).

Work with Buyer Inspection & Repair Requests

If you have a sensible and diligent buyer, they will certainly order a home inspection. Once the inspection and appraisal are completed, both parties will have a clear and objective idea of what work needs to be performed. Depending on market conditions, the agreed sales price, and any other concessions, you and the buyer will decide what work you or the buyer will pay for. It’s tempting to refuse or limit repair requests, but consider the perspective of the buyer: they don’t want to be burdened with repair and maintenance issues right after moving in. Make it easy for them to move in and get started with their new life, and they’ll be sure to work with you toward a successful closing.

Price it Right When Selling Your Home

The importance of proper pricing can’t be understated, even though it might sound like cliché Realtor-speak by now. No matter what the condition, location, or any other factor, there will be a buyer if you price it at what the market will bear. Unless you find a buyer that thinks your home is a diamond in the rough and has an emotional attachment to the property, it’s unlikely that they’ll pay more than any reasonable buyer would.

Look at the most recent sold and active comparables in the neighborhood with a similar year built, living area, condition, and location to get a good idea of what homes like yours are going for. If you need help determining the value of your home, enlist the help of a local agent or give us a call. We’ll help you evaluate the selling potential of your property and identify potential solutions to help you get what you want out of selling your home.

Reach out to us at (617) 250-7100 or click here for professional assistance.

0 Comments/by

Avoiding Capital Gains Tax When Selling Your Home or Rental?

Avoiding Capital Gains Tax When Selling Your Home or Rental?

When we’re selling our properties, one of our first concerns is naturally taxation. In all of our business and investment ventures, we achieve the greatest returns when taxes are kept to a minimum.

You are most likely already familiar with the concept, but capital gains are a special type of tax that are levied against property owners who are selling. Unless certain exemptions apply, the tax will be assessed on the cash proceeds of the sale.

Fortunately, there are a number of strategies that can help you avoid paying all that tax. Keep reading to learn some essential ways to get around capital gains tax.

Owner Occupied

If you just moved, you’re probably not looking to sell right away, but if you decide in the first two years that you want out you’ll be faced with the capital gains liability, if you make a profit on the sale. If you’ve been living in your property for at least two out of the last 5 years, you may qualify for an exemption from capital gains tax on the sales price in the amount of $250K for individuals, and $500K for couples.

The way to avoid capital gains taxes in general is deferring the income of the sale to future years, that way you only pay a small amount on the revenue you generate each year. The related benefit is that it keeps your total income in a lower tax bracket. If you were to take all cash in the year of the sale, with no exemptions, it would push you into a higher tax rate. If you haven’t lived in the property for two years, there are still other options to avoid paying capital gains tax.

Rental Properties

Owning rental properties is like owning a business. There are certain expenses you expect to pay in the course of business. Our least favorite is capital gains when it’s time to make some profit after our long value-building efforts. If your property is a rental and you haven’t lived in it for at least two out of the last five years, you’ll likely be paying up to a 25% tax on the proceeds.

This one of the things that makes ‘house hacking’ a great strategy. House hacking is when you buy a multifamily rental property and live in one of the units. This offsets your personal mortgage or rental expense and can allow you to avoid paying capital gains tax when you pursue your exit strategy. Since our goal with our rental it to make the most money as possible (the bottom line), we have to balance the cost of taxes with the utility of cash. Depending on your needs, transactions can be structured to involve seller financing and cash, a balance of which provides the money needed for personal or professional objectives and shelter from increased tax liability.

Lease Option

Rather than selling your property outright, there’s another option: the lease option. Lease options are simple agreements that allow an optionee to make you payments (regular cash flow ? ?), with a portion going to the down payment or principal. After a specified period of time, often 2-5 years, the buyer (optionee) has the right to purchase the property at a predetermined/index price.

This is attractive to many buyers, especially those that aren’t in the position to buy a house conventionally, as often there are minimal credit and down payment (lease consideration due upfront) requirements associated with lease options. It’s also relatively low risk. If the optionee defaults or chooses not to exercise the option, the optionor (owner) has the right to retain the lease consideration and re-lease to a new optionee. This is a profitable short-term solution to defer taxes and continue generating income.

Extending Financing

Another great option that many sellers prefer to avoid capital gains tax is seller financing.

Why give a loan to the buyer? Why would I want to go and do that?

Cash flow, no management responsibility, protection from liability, and deferral of income to decrease your upcoming tax liability.

You might have heard of a triple-net or NNN lease. This is a type of commercial lease that passes all the operational costs and management duties of the property to the tenant. This is a low risk situation for the investor that provides stable positive cash flow that doesn’t fluctuate as the cost of maintenance and other variable costs increase over the term of the lease. What’s my point?

Seller financing offers property owners the same benefits. You continue to earn a strong return rate (of your choice), while eliminating all your management responsibilities, liability, and diminishing your tax liability. As we’re not CPAs or attorneys, please consult the appropriate professionals before making any investment decision regarding your home or rental.

Waiting for the Right Time

If all else fails and the other strategies mentioned here don’t work for your situation, it may simply be best to wait for the right time to sell. If this is the case, it’s sensible to have a plan to prepare for when you are ready to sell. Take stock of the condition of your home or rental and determine what repairs are needed to get the best market value. If your financial, legal or personal situation poses current barriers to the sale of your property, there are other ways to improve the net income or value of the property. A proactive approach will make your sale faster and more profitable if you start planning properly now.

Call us at (617) 250-7100 or click here to discuss an array of potential solutions to help you achieve your homeownership goals.

0 Comments/by

When is it the Right Time to Sell My House Fast in Massachusetts??

When is it the Right Time to Sell My House Fast in Massachusetts??

When is the right time? Now very may well be. The real estate market and broader economy are dynamic, and it takes a keen intuition to time your sale right.

Demand is high, prices are high, and interest rates are rising. Freddie Mac forecasts that rates will increase to over 5% in the next months. This is going to mean rising homeownership costs and reduced demand. What’s the best way to proceed?

If selling makes sense to you personally, then selling may also be a good decision from an economic standpoint. Read on to learn more about some considerations in selling your house fast in Massachusetts during this volatile market period.

How fast do you need to move?

If you need to sell quickly, now is a good time to consider selling. As we approach the top of the market, appreciation will slow, and interest rates will rise. Both of these situations are occurring now. With market values edging higher and interest rates approaching 5%, affordability is gradually declining. Fortunately, there’s still a lot of demand for housing and marketing times are relatively low, but this won’t be the case as we go into the next year and beyond.

If your move isn’t urgent or you’re not certain about moving, it may be still be a good time to sell as prices won’t be this high again for many years until after the next recession.

Tax Considerations

How recently did you buy the property? If it’s been more than two years and you’ve living in it full time, you’ll likely be exempt from capital gains tax on the sale of the property. The IRS provides an exemption on the first $250K for individuals and $500k for couples from the gain on the sale of a principal residence.

When the tax situation is not ideal for other income, liability, and asset-based reasons, some homeowners choose to rent the property, offer a lease option, or extend seller financing. This helps defer tax liability for gains until the year earned. This strategy can also help provide an interim cash flow to offset ownership and operational expenses. Please request an offer here and we’ll explain the choices you have in selling and structuring your profit from the sale.

Employment & School

How would a move line up with school schedules for student of levels in the household? For elementary, high school, and college students alike, making a big move can cause a lot of stress and interfere with study and course schedules. It’s not just students, everyone who works has a lot on their plate. In planning your move, consider everyone’s schedule and work it out ahead of time. With a little planning, coordination, and compromise, a successful move can be pulled off during the work and school season.

Work with a skilled investor, agent, loan officer, appraiser, and other quality real estate pros to guide you in selling your property and understanding how the market will influence the outcome of the transaction.

Available Inventory

If you move now, will there be a home for you to buy? There’s another good point here about possibly looking for an offer. Right now, inventory is low, but it’s still possible to find another property. As the market slows, inventory may increase, and it’ll be easier to get a good deal, but the price of your property will also be falling. Deciding to sell is an important decision, not an easy one, that must be made carefully.

Selling your rental? Inventory may not be as much of an issue if you’re selling your rental property and not needing a replacement residence. A rising inventory may mean falling home prices and reduced demand for rentals. Rental values are currently very strong throughout Massachusetts.

Considering Offers

If you haven’t conducted a CMA, or received an offer on your property recently, you may not be aware of the current market value. It’s worth your time to request an offer to get an idea of how much you could quickly walk away with by selling your property for cash to professional and credible investors (who are also licensed appraisers in Massachusetts). We’ll provide you with all the information you need to make an informed selling choice. Please read our ebook for more about the selling process.

0 Comments/by