Advice Please!!!

[Beachlover2]

I have our house up for sale in the Chicagoland area - the market is lousy here as well - Anyway - 5 mos later - I have a offer - not on the house but the lot I own next door. Someone wants to build a new house on it. This is an established neighborhood. So if I sell it - I will have new construction going on probably next spring - making it even harder to sell my current house - but if I sell it I will be able to pay off my mortgage on my current house and move on without worrying about morgages - I have also decided to try to rent it since it doesn't seem to be selling - but once again with construction going on next door - will I get a renter?

Help - need imput and what I should do.

Thanks!!!!!

 

[Smiling JOe]

Interesting situation. You might want to talk to an accountant, because of the potential tax savings you might be eligible for, when selling vacant land which is adjacent to your primary residence which you have lived in for 2 out of the last 5 years, if you sell the house within 2 years of selling the lot. If you meet the qualifications, you can include the profits from the sale of the lot as going toward your $250K per person, tax free capital gains. I'm not an accountant, but you should talk to one about your situation, and use that info to help you make a more informed decision.

 

[PalmBeach]

Sell the lot & pay off the mortgage. Then the pressure is relieved and you can figure out what to do next. If you want to rent it, you will be able to take a lower than market rent beacuse you do not have a mortgage. I am a fan of the Dave Ramsey method - NO MORTGAGE.

 

[TooFarTampa]

Interesting situation. You might want to talk to an accountant, because of the potential tax savings you might be eligible for, when selling vacant land which is adjacent to your primary residence which you have lived in for 2 out of the last 5 years, if you sell the house within 2 years of selling the lot. If you meet the qualifications, you can include the profits from the sale of the lot as going toward your $250K per person, tax free capital gains. I'm not an accountant, but you should talk to one about your situation, and use that info to help you make a more informed decision.

Oooh, that could be interesting. Because if you sold the lot and rented the house out for two years, and then sold the house, I wonder if you could then also avoid some taxes on that transaction? Yes, an hour's time with a good accountant seems like a wise investment.

Good luck.

 

[Mermaid]

I have our house up for sale in the Chicagoland area - the market is lousy here as well - Anyway - 5 mos later - I have a offer - not on the house but the lot I own next door. Someone wants to build a new house on it. This is an established neighborhood. So if I sell it - I will have new construction going on probably next spring - making it even harder to sell my current house - but if I sell it I will be able to pay off my mortgage on my current house and move on without worrying about morgages - I have also decided to try to rent it since it doesn't seem to be selling - but once again with construction going on next door - will I get a renter?

Help - need imput and what I should do.

Thanks!!!!!

So it took 5 months before you got an offer and it wasn't even for the house. Give or take a little bit, that's the same amount of time it take to construct a house. We're talking about a finite amount of time to build; an infinite amount of time to get an offer on the house you're selling. You could sell the lot NOW, pay off your mortgage, and in the meantime you might not even get a nibble on the house you have on the market. The new house constructed on your sold lot could be in its final stages of construction by the time a buyer comes along for the house. You'd kick yourself if you didn't sell the lot because of worry over a few month's worth of construction noise.

If there's a serious buyer for your house, that person still has to wait about a month to close, which buys them time if there's construction. And if they want your house, a month or two of noise won't deter them. In the scheme of things, given the number of years most people own their homes, a construction inconvenience is negligible.

 

[Beachlover2]

My head is swimming - thanks for all the imput so far - keep it coming. I will definitely try to get a hold of my acct.

 

[Smiling JOe]

My head is swimming - thanks for all the imput so far - keep it coming. I will definitely try to get a hold of my acct.

Adjacent property being considered as part of the yard, by the gov't, is a fairly recent change in the tax code. In the past, adjacent lots were not considered to be part of the primary residence, as far as the tax code went. 15% savings could be a nice perk.

 

[SHELLY]

Are you still paying a mortgage on both the house you have up for sale and the lot next door?


.

 

[frankfromfla]

I would sell the lot. The new home construction could actually help stablize the value of your home for sale next door or actually bring it up. Presuming you have a mortgage at say 7% and pay it off, you would be gaining that back (+7%) and if you don't sell it now you would have negative cash flow (-7%). That's a 14% swing so cash would be building faster than you think and you can spend it in Walton County when you want and where your heart is.

 

[elgordoboy]

I would sell the lot. The new home construction could actually help stablize the value of your home for sale next door or actually bring it up. Presuming you have a mortgage at say 7% and pay it off, you would be gaining that back (+7%) and if you don't sell it now you would have negative cash flow (-7%). That's a 14% swing so cash would be building faster than you think and you can spend it in Walton County when you want and where your heart is.

You don't get it both ways (+7 and -7) but sound advice nevertheless.