Posted by JohnBoy on March 18, 2001 at 14:14:16:
I think to get the full $500k you have to be married selling as a joint couple. If she is single the exemption is $250k.
Ed, and others Please Help, 1st offer on home/LOT - Posted by John
Posted by John on March 17, 2001 at 18:49:16:
I am pretty new to most of these concepts but am in need of some help. Here is the scenario:
An older woman lives in an older home, she also owns the lot next door. She is 95 and has lived there for many years.
I want to buy the lot and build a spec home on it (and I wouldnt mind getting the existing home also).
I asked her if I could buy the lot from her and she said she would definitely sell it BUT (her words) because it does not have a house on it - she would not be able to take her “one time” tax (capital gains) exemption/deduction and would need to sell the existing house WITH the lot to take the exemption… (as a side note, she is moving into a retirement home in the next year and will be selling both anyway).
This is a very hot community and buildable lots are very rare -AND- if an agent gets to her, it will be top dollar (that would eliminate me from the competition with builders with much more capital).
My questions:
- Regarding the exemption, I know this was the way it used to work but is that still the case? It thought the laws had changed with regard to the one time exemption.
- What would you suggest for making this situation work (i.e.- new laws re exemptions or purchasing now and letting her live there until she moves???)
Thank you very much for any advice - I am in desperate need of advice in this situation. Would like to take a clear, concise offer to her which could be a win win for both.
Thanks for any suggestions.
Re:Ed&others Please Help,1st offer on home/LOT - Posted by Ed Garcia
Posted by Ed Garcia on March 18, 2001 at 08:43:49:
John,
I’m afraid the old lady is confused. First if all, you are correct the law has changed, you can sell your home after 2 years up to $500,000, however the problem is, that’s for a residence, owner occupied and wouldn’t apply to a vacant lot.
The thing that I would do immediately is get a copy of the tax change and show it to the old lady, rather then tell her, and then rely her taking the time to verify it. I would work her slowly for the obvious reason and make a friendship with her.
If I were to purchase the house as well, I would make sure that I obtained a loan on the house, but ask the old lady to carry the note on the vacant lot. I would also request that she subordinate her mortgage to a construction loan. As I said before john, work her slow, don’t make her feel pressured.
Ed Garcia