10/29/2024 – Can you sell before 2 years?

Thank you to those of you who made it to Oktoberfest this year! It was another great turnout, and we had lots of fun. We have been doing Oktoberfest for nine years, and we hope you can make it to celebrate 10 years of Oktoberfest and 30 years at Augusta Financial.

Yesterday, I got a call from a client looking to sell and buy. Still, they have not owned the house for 2 years, so we started talking about 17 ways to buy now and sell later, and then I asked what they paid for the property, how much they put into the property, and how much they will be able to sell the property for. We figured out they do not have to wait two years because there is no profit!

So, how does the IRS look at profit when you buy and sell two years before or after two years when you have over $250,000/$500,000 in profit?

They look at your net profit after all expenses on your primary residence! If you buy a house for $1,000,000, you do $35,000 in improvements, and you sell for $1,150,000, how much do you have in profit? First, we have to know a few things. How much were your closing costs outside of points when you purchased? When you sell, how much will your closing costs be, including realtor fees? How much did you spend on Home Improvements?

Why not points? Because you likely wrote those off the first tax year after you purchased your home.

Looking again at the above, our buyer had $8000 in closing costs, $35,000 in improvements, and selling costs will be about $6000 + $57,500 in fees to the real estate agents. All of that adds up to $106,500, so this person would have a Capital gain of $43,500 and likely pay taxes of about $12,000. If they had paid $1,045,000 and sold for $1,150,000, they would have lost a few bucks and could sell at any point.

I have heard of people fudging additional expenses on a property to avoid Capital Gains. I know this has worked in the past, and I think it is a safe move, assuming you don’t go crazy with it. I am not a CPA, but the IRS cannot knock on the door and ask to see the bathroom remodel you did on the house you sold a few years ago!

That’s about it for today!

I am available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property. My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

But wait, there’s more!

Forty-three days ago, interest rates were at their best levels in almost two years. Today? Rates look like last summer, with some interest rates having a 7 in front of them. This is not inflation; this is a stronger-than-expected economy, the potential of one party winning the House, Senate, and the presidency, and economic data showing up stronger than expected. All of this adds up to higher rates for now! I don’t see a scenario where rates stay at these levels next year, but I guess anything is possible.   

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA/ USDA) are in the 5’s and 6’s.
• Conventional Loans up to $766,550.00 are in the 6’s
• High Balance Loans $766,550.01 – $ 1,149,825.00 are in the 6’s
• Jumbo loans above $1,149,625 are in the mid to high 6’s
• Bank statement loans - They are available with 10% down again, and larger down payments are in the 6’s.
• Profit and Loss Statement loans – 20% down – You don’t need bank statements, just a profit and loss statement!
• No income qualifier – 40% down with r serves In the 8’s!
• 0 down loans are in the high 6’s – 620 credit score min right now, up to $1,191,000.00.
• Private Money lenders - Hard Money Loans – 35% down!
• No Ratio Loans 30% down
• DSCR – Debt Service Coverage loans with as little as 15% down
• Bridge Loans - typically 7.99% with limited fees – and they get you where you need to go!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice. The above are LA County Loan Limits.

Good News – Cornerstone got their shit together, and they are warrantable! YAY!  

Bad News on Condos – Village Walk  – Insurance issues - Insufficient insurance.

All other naughty condos have been moved to MikeMeena.com. I will post updates here, but all the information on the naughty list is on my website. Just go there and click about it, and you will find our most updated list.

Please let me know if you hear anything new on condos or townhouses.

I am still available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property. My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. y direct line is 661-291-2222 When you text me, please text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a great day and an even better tomorrow. Please call me when you have a client who needs to borrow!