Good, bad, or indifferent… as a society we are certainly becoming more conscious of health hazards around the home. The Environmental Protection Agency provides an abundance of information regarding such substances as lead-based paint, radon, asbestos… and best of all in language non-scientists can understand. For resources and an education visit www.epa.com — for most people there’s way more than you want to know! But if it’s not, you can always check out the Maine Department of Environmental Protection at www.maine.gov/dep/ — you might find navigation a bit challenging, but much of it will be “state specific” and wide-ranging. Remember, for example that the DEP is responsible for Shorelands Zoning and you’ll track down some great information regarding what you can/can’t do with waterfront property.
With a gadzillion big disclaimers that I’m NOT a tax specialist… here’s a red flag I’m going to wave…
Most people are aware that if you own and sell real estate after holding it for one year or more you’ll likely have to pay capital gains tax unless you qualify for the exclusion. But here’s something a lot of people probably don’t know. When you start selling multiple properties, the IRS may consider you to be a “dealer” in real estate, particularly if you are holding them less than a year. If/when that happens you end up being taxed on gains as short-term capital gains – the same tax rate you pay on ordinary income. The difference can be significant. Instead of being taxed at the current capital gains rate of 15%, you may have to pay up to 35%.
There are a number of factors the IRS uses to determine whether the taxpayer gets classified as a “dealer” or an “investor.” Because I’m not a tax specialist, I’m not going to try to tell you what they are! But I will tell you this: if you are going to start buying and selling more than a few properties per year, consult a tax specialist!
I recently had the opportunity to attend a continuing education class on “titles.” Fascinating subject and one that is filled with myths and misunderstandings. You can expect more information here soon… but in the meantime here’s a story for you that will be appearing in the next (soon to be released) issue of my print newsletter, MoosePrints.
Unfortunately… the true identity (or whether or not this story is, in fact, true!) of the lawyer is lost somewhere among many email forwards. So we’ll have to call him “Attorney Anonymous.” The process involved here is an important part of home buying and selling, although in this case a bit extreme. If you are buying a home, you’ll want to become familiar with title searches and title insurance. (Suffice it to say for the purpose of this story that a title search “proves” that the current owner/seller has clear title and the legal right to sell the property to the buyer.)
A New Orleans lawyer was involved in a real estate transaction that required an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title