I bought a house preconstruction for 628k...it just got being done built june 1st. Its currently selling for 707k. The new models. I got an offer for 717k for my house. There is also a 50k penalty for selling or renting within the first year. If i take the offer we are going to do a lease to buy option where nothing comes out of my pocket for expenses. I also do not have to pay a broker, real estate agent because i am an liscense RE agent and the buyer is being represented by my aunt who is a broker and owns her own company. My payment on the house is approx 4500 per month 5.375 on 80% and 7.0% on 20%. I believe the place where this property is at will increase to atleast 825k by june 2006 and 750k by the end of this year. The 4.5k a month payment doesn't bother me at all and the home would remain empty till the one year mark and just used as a kind of weekend home. On one side i can sell it and make about 90k but be taxed at pretty much 50% or i can hold on to it till the one year mark is up or even 2 years so id on't have to pay tax. I am also claiming this as my primary residence. I also have another house that i rent out and live at home with my parents. The property is in the san francisco bay area. Any suggestions or comments on what i should do?

Luniz97 said:I bought a house preconstruction for 628k...it just got being done built june 1st. Its currently selling for 707k. The new models. I got an offer for 717k for my house. There is also a 50k penalty for selling or renting within the first year. If i take the offer we are going to do a lease to buy option where nothing comes out of my pocket for expenses. I also do not have to pay a broker, real estate agent because i am an liscense RE agent and the buyer is being represented by my aunt who is a broker and owns her own company. My payment on the house is approx 4500 per month 5.375 on 80% and 7.0% on 20%. I believe the place where this property is at will increase to atleast 825k by june 2006 and 750k by the end of this year. The 4.5k a month payment doesn't bother me at all and the home would remain empty till the one year mark and just used as a kind of weekend home. On one side i can sell it and make about 90k but be taxed at pretty much 50% or i can hold on to it till the one year mark is up or even 2 years so id on't have to pay tax. I am also claiming this as my primary residence. I also have another house that i rent out and live at home with my parents. The property is in the san francisco bay area. Any suggestions or comments on what i should do?so many problems with this I cant even begin... but good luck! Besides your family members, can we presume theres no professionals involved in advising you on this near million$ transaction?

Any reason why you didnt post this in the investment property thread?

Well, my aunt isnt buying the property. She just found a buyer for my property if i want to sell it.

I don't understand what is wrong with some of you people? I am looking for advice not your stupid retard comments.

Luniz97 said:well its not really tax fraud because no one lives in it. So therefore its my primary residence.

I don't understand what is wrong with some of you people? I am looking for advice not your stupid retard comments.

Your primary residence is the place you live.
Claiming an empty house is your primary residence to save on taxes is tax fraud.

Luniz97 said:okay besides the point i can move into so its not fraud.If you want to claim the 250k cap gains exemption, it cant be a "weekend" house...the fact you "COULD" move in or that its not occupied by someone else doesnt help you either.

But dont believe us, consult a pro and report back what they say. Youre talking about potentially hundreds of thousands of dollars of YOUR money , not ours. Its up to you to be foolish or wise.

Luniz97 said:ok well if i don't sell it i will be moving into the propertyyou still dont get it...and its a shame too - you have the right connections, minimal/no cash outlay , and rapid appreciation all working in your favor.

Properly structured, this could be a goldmine. But from whats been posted, it has NOT been structured correctly, you are bleeding thousands per month, you plan on bleeding thousands more with an unoccupied property that has $5k+/month expenses (mortgage, taxes, insurance, etc), AND acting as if you know the ways "around" things, yet deep down you realize there are issues with which you need help.

You NEED (not "should have", not "might want to find") a good tax pro, and possibly other professionals to advise you. And while getting basic suggestions here is good, you need advice SPECIFIC to your properties. A pro needs to sit down with you and the relevant documents.

Also, dont discount the comments you get here because you dont like what you are hearing!

Best of luck

There's no use trying to "backpedal" and think of ways to explain this away....you have already posted you are claiming, or plan to claim 2 different homes as your primary residence, NEITHER of which you actually live in. You are/will be cashflow negative on each one, for a year or more. Lets not even GET INTO the insurance nightmare of an unoccupied property.

You know you need to avoid big tax hits, but havent given sufficient thought to making sure things are structured properly. Why the refusal to sit down with a tax pro? You have a fairly complex situation, and 2 properties worth in EXCESS of $1million - this cant be adequately handled by an internet forum.

have you ever considered that you might do much better by truthfully claiming one of both of these as investment properties....if you read the investment property thread in this forum, you would have learned of some of those benefits ($25k deduction off earned income, 1031 taxfree exchanges, etc)

didYOUsearch said:There's no use trying to "backpedal" and think of ways to explain this away....you have already posted you are claiming, or plan to claim 2 different homes as your primary residence, NEITHER of which you actually live in. You are/will be cashflow negative on each one, for a year or more. Lets not even GET INTO the insurance nightmare of an unoccupied property.

You know you need to avoid big tax hits, but havent given any thought to making sure things are structured properly. Why the refusal to sit down with a tax pro? You have a fairly complex situation, and 2 properties worth in EXCESS of $1million - this cant be adequately handled by an internet forum.

have you ever considered that you might do much better by truthfully claiming one of both of these as investment properties....if you read the investment property thread in this forum, you would have learned of some of those benefits ($25k deduction off earned income, 1031 taxfree exchanges, etc)

I never said i claim 2 homes as my primary residence? Please show me where?

I can't claim both of them as primary residences...i am not that stupid...they are 10 miles away from each other...nor can i claim it as a 2nd home. I already consulted someone about that.