The Weekly Poll: Would you make money if you sold your house today?
photo credit: backkratze
The weekly poll is trying to figure out if its upside down in its house or not. Go vote and help it crunch some numbers.
This week’s poll topic is one I’ve been dealing with and talking to a lot of people about lately: would you make money if you had to sell your home today? It’s no secret that it’s been a tough couple of years in the housing market, and even though it looks like we may finally be seeing the glimmer of light at the end of the tunnel, the rate of home appreciation is still sluggish. Determining potential market value of a home and helping a seller determine their possible net profit from the sale of their home has always been a part of my job, but these days it seems like it’s one of the most critical — and sometimes least happy — parts. Quite simply, some folks, especially those who bought at the height of the market, simply aren’t going to make any money when they sell their homes. A few may even have to bring money to the closing table in order to move. Ouch. However, I also talk to folks who have plenty of equity in their homes, but simply aren’t willing to accept that their property hasn’t continued to appreciate at the rate it was back in ’04 or ’05. Newsflash: the bubble burst a while ago, people.
So what about you? If you had to sell your home in today’s market, how would you fare? Would you make back at least what you paid for it? Make out like a bandit? Or would you feel like you were the one getting robbed at the closing table? Cast your vote and let me know.
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Author: Suzy
Hard working Knoxville real estate agent by day. Intrepid Knoxville real estate blogger by night.
I bought at a good price, right as the market was heading down. As such, I qualified for the first stimulus tax break of $7,500. This one, unlike the $8,000 one has to be repaid back at $500 a year on taxes beginning in 2010 tax year, or in a lump sum if the house is sold before it is repaid back.
if what Zillow says is true, I have about $10,000 in equity right now. So taking the repayment into consideration, I would only net about $2500. Now, if seller’s closing costs can be kept below that, then we would break even, but I am not holding my breath. If we have to move, I will most likely turn this into a rental for a couple of years before considering selling it.
As promised, I looked at the IRS repayment rules, which can be found here: http://www.irs.gov/newsroom/article/0,,id=186831,00.html
The basics are thus:
The $7,500 first-time homebuyer credit is similar to a 15-year interest-free loan. Normally, it is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. The repayment amount is included as an additional tax on the taxpayer’s income tax return for that year. For example, if you properly claim a $7,500 first-time homebuyer credit on your 2008 return, you will begin paying it back on your 2010 tax return. Normally, $500 will be due each year from 2010 to 2024.
- If I die, any remaining annual installments are not due. If I filed a joint return and then I die, my surviving spouse would be required to repay her half of the remaining repayment amount.
- If I stop using the home as our main home, all remaining annual installments become due on the return for the year that happens. This includes situations where the main home becomes a vacation home or is converted to business or rental property. There are special rules for involuntary conversions. Taxpayers are urged to consult a professional to determine the tax consequences of an involuntary conversion.
- If I sell my home, all remaining annual installments become due on the return for the year of sale. The repayment is limited to the amount of gain on the sale, if the home is sold to an unrelated taxpayer. If there is no gain or if there is a loss on the sale, the remaining annual installments may be reduced or even eliminated. Taxpayers are urged to consult a professional to determine the tax consequences of a sale.
- If I transfer your home to your spouse, or, as part of a divorce settlement, to your former spouse, that person is responsible for making all subsequent installment payments.