Home Selling Tax Deductions

The IRS grants some tax deductions for home sellers. Getting the deductions requires that you itemize your taxes, admittedly a tedious job, but one that is probably worth your while. Here are five tax deductions you should take this year.

1. Selling costs

If you don’t qualify for the 121 exclusion, you will owe taxes on any profit, so make sure you deduct all your selling costs from your gain. You can deduct the following:

  • Your real estate agent’s commission
  • Legal fees
  • Title insurance
  • Inspection fees
  • Advertising costs
  • Escrow fees
  • Legal fees

And there’s another consideration. Vanessa Borges, an enrolled agent and tax preparation supervisor with the Tax Defense Network, notes, “You might qualify for a partial exclusion if you sell your home due to circumstances involving divorce, change in employment, change in health, or other unforeseen circumstances.”

2. Moving deduction

If you have to sell your house because you’re relocating for work, you might be able to deduct some of your moving expenses. Deductions could include transportation costs, travel to the new place, storage costs, and lodging costs.

3. Property tax deduction

“You can deduct your property taxes for the portion of the year that you owned the home,” says Dr. Kimberly R. Goodwin, associate professor of finance and the Parham Bridges Chair of Real Estate at the University of Southern Mississippi. Deduct the taxes “up to, but not including the date of the sale,” according to the IRS. The buyer pays beginning from the sale date.

4. Home improvements

Sometimes need to improve your home — not for your own benefit and enjoyment, but for the home’s future owners. If you make home improvements that help sell your home (like replacing a leaking roof or defunct HVAC system), and if they are made within 90 days of the closing, they are considered selling costs, which are deductible, according to Goodwin.

5. Points

If you paid mortgage points to lower your interest rate when you refinanced your home, you might qualify for an additional deduction. Because you can deduct a proportional share of the points until the loan is paid, when you pay off the loan through a sale, you can deduct the remaining value of those points.

What can’t you deduct?

Tax deductions are fickle. They can vary from state to state and from year to year. Home sellers check with a tax expert to confirm the deductions are still available at the time of the sale.

Taxes can be confusing (Who knew?)

There is also some confusion regarding deductions. Sean P. Storck, a certified financial planner and enrolled agent with Rawdin-Baron Financial in California, explains that many sellers think they can deduct, but can’t. Storck says the biggest misconception concerns repairs, and that “generally speaking, anything done in the course of maintaining property for normal use is nondeductible.”

The same goes for what is called “phantom labor,” in which “you do the work of constructing your home on your own. Although you may have worked your tail off, you still cannot deduct your sweat equity come selling time.

Crisis Management

The Buyer knew the Seller was going to be a challenge from the get-go. Everyone made sure of that. 

The Buyer's agent prepared her for an unpredictable Seller that needed to sell but wasn't prepared to move. The Seller's agents were missing in action, likely because of the Seller's uncooperative actions.

The Buyer wanted the house though.

The escrow wasn’t exactly fun, inspectors were turned away, access was rarely granted. There were threats from the Seller standing akimbo on the lawn, fist waving at the gentle sewer inspector. The Buyer's sole consolation was that once the transaction closed she and her four cats would be in her new home before the holidays. Four cats that were at the time traveling from Ashville, North Carolina to this Los Feliz home in the back of a very large moving-truck.

Closing day!  

At 9am the buyer's agent picked up the keys and met the buyer at the property in the pouring rain.  The moving truck arrived and 4 stressed out cats could be heard howling through the walls of the trailer.  

Upon entering the home they became uncomfortably aware of a new problem. The Seller had not packed a single box let alone any of the furniture that filled each unforgiving square foot of the house.  Where was the Seller?  Oh there she is. Hiding under a blanket on the couch...in the dark...pretending not to be there.  

The first time buyer, freaked out. This wasn’t what she bargained for. She had had enough and couldn't take it anymore.  It also became more than creepy.  

Someone needed to fix this. NOW. 

Someone did: The Crisis Manager.

The buyer's agent put on his gloves and got everyone to calm down. He had his assistant pick up boxes, coffee and donuts.  He then rallied the neighbors into a unified packing task force.  A cab was called, which the Seller was literally carried and deposited into and sent away to a newly booked hotel room.  Within 6 hours the cats were somewhat comfortably inside and the moving truck was empty.

Things were back on track.  Someone yelped the obligatory "crisis averted!"

True story. This happened to us. 

...

When I hear that agents are lazy and will be replaced by technology or that agents are overpaid, I remember that day in the rain. I remember the look of fear and hopelessness on the buyer's face. I remember the quivering lump on the couch. I hear the cats. 

Maybe there will be an app/service/technology in the future that replaces agents.

One thing I am pretty sure of is that whatever comes to replace us agents it will have to handle the crisis management.  

The Crisis Manager is the experienced agent, office manager, broker/owner or team leader that fixes messy transactions like the one described above. The degree of messiness varies, but the messes are very common.

It’s the mess that makes agents valuable.

Silver Lake Streamline Moderne Duplex

Priced at $1,399,000

open 10/25/15 2-5pm

Downstairs is advertised as a 3 bedroom 2 bath. Due to size and accessibility the third bedroom would most likely be used as an office.

Upstairs living area. 

Upstairs living area. 

The upstairs unit's original details  have been well preserved. Downstairs has been tastefully updated.

The three bedroom downstairs unit would rent for upwards of $3,300.

Upstairs would fetch $3,000.

Upstairs living/dining with built-ins. 

Upstairs living/dining with built-ins. 

Upstairs kitchen with views facing downtown. 

Upstairs kitchen with views facing downtown. 

View of shared rear yard from upstairs landing. 

View of shared rear yard from upstairs landing. 

Upstairs entrance to bedrooms. 

Upstairs entrance to bedrooms. 

upstairs bedroom with south facing balcony. 

upstairs bedroom with south facing balcony. 

view east. 

view east. 

view south

view south

view west  

view west

 

Downstairs master bedroom. No attached bath. 

Downstairs master bedroom. No attached bath. 

downstairs dining area. 

downstairs dining area. 

image.jpg

Seller Tips to Prepare Their Los Angeles Home for the Buyer Inspection

Your Los Angeles home is under contract. Now comes the home inspection. 

 1. Offer the access a home inspector needs to complete his or her report.

You don't want the buyers to see "not tested" or "unable to access/not inspected" on their report, and inspectors don't move furnishings, so be ready.

If you're living in your Los Angeles home:

2.Move any furniture or obstructions away from radiators, heating elements, heating vents, and air conditioning vents.

Make sure the fireplace is empty of everything other than faux gas logs.

Move everything away from the water heater, breaker boxes, electrical panels, and electrical outlets.

Remove everything that would obstruct access to the attic and the crawl space.

Remove excess items from the attic and crawl space – so the inspector can move around freely.

Move cars out of the garage.

Remove everything from the tub, shower, and kitchen sink. Then remove everything from under the bathroom and kitchen sinks. Remove items sitting on top of the toilet tank lid.

Empty the dishwasher. If the kitchen range and the washer and dryer are staying with the house, empty them as well.

Replace any burned out light bulbs.

Have all keys and codes available so the inspector will have easy access to all areas both inside and outside the house.

Take your pets out of the house or put them in kennel cages during the inspection.

Trim shrubbery and other plants away from hose bibs, dryer vents, the air conditioner, and outdoor lighting and electrical outlets.

Turn off your computer! (The inspector may be turning power off and on – and you don't want to lose any data because of a power loss.)

And… If you've already moved out:

Be sure that the utilities are turned on and that all pilot lights are lit and burning.

If your appliances uses propane or fuel oil, be sure the tanks hold enough fuel to keep things running during the inspection. 

Creating easy access for the inspector means your home will be inspected thoroughly, so your buyers won't be left with doubts that could cause them to withdraw their offer. 

5 Steps to Buying a Home

Few things in life compare with buying a house. For most this is the single largest transaction of their life. Therefore, most home buyers want to get it right the first time. To help you do that The EastSide Co. suggests five steps you should take to purchase a home.

 

Five Steps To Buying A House


Step 1: Research what you want long before you ever talk to a professional real estate agent or developer. Sit down and determine not only what type of new house you want, but also WHY do you want to buy a home?

This is important, because you need to have a clear idea of what type of house you want, and why it is important for you to live in this home.

Step 2: Start researching bankers and real estate agents. Make sure they have the experience to get the job done. Even more important, make sure they listen to what you need. The best way to do this is to ask them questions about their experience. Sometimes it might even make sense to find a good real estate agent or mortgage broker, then ask them who their favorite banker or realtor is. This way you will have a united team effort, because the broker and banker know how to work with each other to get the job done.

Step 3: Next, before you even start looking at your first home you need to get a pre-approval letter from the lender. Most realtors today will not even take you out until you have some type of finance letter. This letter simply informs realtors that you have the financial ability to buy a home.

Step 4: Go through the listings with your agent to find the right house for your needs. While you should have some clear ideas of what you want, consider the real estate agents advice as well. They are trained to look at how to buy a real estate property, which means they might catch that the boiler looks old. Something you might not pick up if you have never bought a home.

Step 5: Weed down the undesirable homes. A good real estate agent will ask you questions about what you liked and did not like about each property. That way, they can eliminate properties that do not fit your needs, and visit more of the properties you like.

Once you have a good home, this is where you put down a contract. For those who have never bid on a home, be aware the seller usually will not accept the first offer. This is normal. A back and forth negotiation will start, until both sides come to an agreement.

In the end, the steps we mention above are a guideline for you to buy your new home. They help you navigate through a process that can sometimes be confusing even for experience home buyers. This is why having the right team is important in selecting the right house.

Lincoln Heights under $500K

This is an excellent piece of property for $499K.

Will sell for a little over asking. 

9,000 square foot lot. 

Home is perched privately on a knoll above Broadway. 

Seller has kept in immaculate condition.  

Area above 4 car garage asking for a second unit. 

There are several steps to the main house.

Met the Seller who was really nice and shared that he's selling because he'd like to move somewhere more rural. 

One of the many outdoor areas. 

One of the many outdoor areas. 

Horseshoe court. 

Horseshoe court. 

Clean, maintained kitchen. 

Clean, maintained kitchen. 

View from the Master looking east. 

View from the Master looking east. 

Panoramic view of side yard. 

Panoramic view of side yard. 

Entry looking through living room into kitchen. There is a den downstairs, a detached 1 car garage sized storage room and a 4 car garage at street level.

Entry looking through living room into kitchen. There is a den downstairs, a detached 1 car garage sized storage room and a 4 car garage at street level.

Priced to sell. Shows well.  

Breakfast at Millie's

http://milliescafela.com

3524 W. Sunset Bvd. South side of the street. 

Acai bowl here is delicious and you won't feel like you are missing out when other diners at the table are double fisting bacon and eating chocolate chip pancakes.

Acai bowl at Millie's Cafe LA includes: hemp granola,  banana, strawberries, acai, peanut butter almond milk, shredded coconut.

 

Double fister.

Double fister.

Definitely the offspring of a butcher. 

Definitely the offspring of a butcher.