Go to Jeff Salisbury LWGate Home Page.From: Christy Rohrig <christy@netwiz.net>
Subject: Re: persfin-digest V5 #59
Date: Fri, 23 Oct 1998 06:36:19 -0700
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Hello Dean, Wait on the house purchases.... The rules changed as of May 7, 1997 (or so). Under the old tax lay, you could only defer your gain and then at 55 take a once in a lifetime expemtion of $125,000. Well, yea for us homeowners that the real estate lobby is so strong, the new tax law lets you write off $250,000 of your gain if you're single and $500,000 of your gain if you're married. You should take a look at IRS pub 17 under sale of home or consult a tax accountant to get all the details (must have owned the house for 2 of the last 5 years, must have lived in the house for 2 of the last 5 years etc.) Hope this helps, - -Christy p.s. If you carry a second loan on the CA house, you spread the gain over the term of the installment sale, but most likely, there's not too much after the $250k exculsion. Also carrying the loan may make it easier for someone to purchase your house (avoid the evil of PMI by using owner carried second to make the bank finance only 75%). When I bought my house in California, I had to use owner financing to allow me to buy the house I did. I structured it as a interest only loan with balloon in 5 years. I ended up paying it off in 1.5 years, but because of my salary, I would not have qualified for the bank loan if I had to pay both P&I on the owner carried loan. Kind of weird, but that's the banking system for you. - -
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