Home Buying in Sacramento>Question Details

Paloma Jacks…, Home Buyer in Citrus Heights, CA

Need advice on buying home post-foreclosure.

Asked by Paloma Jackson Cornet, Citrus Heights, CA Sun Feb 3, 2013

In Nov 2009 my husband and I had our home foreclosed. With the help of my parents in Jan 2011 we purchased another home. Officially of course, the home mortgage is in their name as is the title. We make the payments directly to their bank. Because we live 10 miles from them, they had to purchase this home as an investment property. We put down the 20% required. Our initial plan was to have the house paid off in seven years, well unfortunately things have changed. My parents' health has really suffered in the last two years. I'm afraid soon, they will need to move in with us. The problem is, this home is multi-level and will not work. So my question is/are: Would it be better to sell this home first? I'm assuming since it is considered an investment property, there will be tax implications. Or should we have them turn the title over to us first? then sell? The plan is to purchase a one level home where they can - if needed- live with us. They own their home.

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Gordon Cuffe’s answer
It is the perfect time to sell a home in Sacramento. We are currently experiencing a shortage of homes for sale on the Sacramento mls. If you put 20% down on the next home, you should be able to get financing in your name since it has been more than 2 years. Have your parents talk to their tax person to see the tax ramifications of selling that first home. I would be happy to sell your home fast at a lower than normal percentage rate. I can be reached at 916-261-2381

You can get all the real estate market data at http://www.findhomesforsaleinsacramento.com/
0 votes Thank Flag Link Tue Feb 19, 2013
I am an attorney and real estate broker and I would be happy to meet with you to dicsuss your options. As you can see from the responses you really need to get some legal and tax advice before proceeding. Please call me to schedule a time to come to my office for a free consultation. thanks TED
Web Reference: http://www.tedgreenelaw.com
0 votes Thank Flag Link Mon Feb 4, 2013
You need to contact your tax consultant about the tax implications if any. Since the property has not been owned that long the appreciation of value is probably not that great, and it is going to depend on how your parents have been claiming the property on their taxes.

Tax implications may be worse if your parents "gift" you the home, plus the current loan most likely has a due on transfer clause. Again talk to a good tax person. If you don't have a tax person contact me direct and I will send you some names.

I see one of your options as:

Everyone move into your parents home, then sell the rental, look for a new home and finally sell your parents current home. Speak with an attorney as to how to best hold title to protect all of you.
0 votes Thank Flag Link Mon Feb 4, 2013
You have several questions you need answers for:
1) Do you qualify for a new loan
2) What is the equity in the home you live in
3) What is the net equity if the home were sold
4) What are the consequences of the sale of present home

If you qualify for a new loan and if the net equity would be
sufficient to purchase the new single story home that
might work.
Taxes are not our expertise so I would always refer you to an
expert in the field. That said
If the home is sold and there is a net profit, that should create a
tax liability for your parents-----at a long term capital gains rate.
If the sale only nets the amount of initial investment then there
should not be a tax able event.
From the net funds from the sale, they could gift funds to you
for an FHA purchase.
0 votes Thank Flag Link Sun Feb 3, 2013
Question continued...Our current credit scores are "fair" I believe, between 670-700. We have never been behind or late on any of our other credit accounts. We would prefer to get a new loan on our own and leave my parents out of it, but they would be willing to help if needed.
Any advice would be greatly appreciated. We live in the Sacramento, CA area. Don't want to keep this home as a rental as we need the $50K we put down to use as a new down payment. Thank you in advance
0 votes Thank Flag Link Sun Feb 3, 2013
Call me i will explain the process to you over the phone 916-705-1693
Flag Sun Feb 3, 2013
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