Home Selling in 97203>Question Details

Pattiann, Home Seller in Portland, OR

I live in the University Park neighborhood and own a 6 bedroom home with a joining build able lot next to it.

Asked by Pattiann, Portland, OR Sat Apr 26, 2008

I'm getting it ready to put on the market and would like to know what would be the best way to sell the lot and home. Together? Or Separate?
I'm a widow, and concerned about the capital gains tax because I'm only able to use the 250,000 tax credit once.

Thank you for your advice!

Help the community by answering this question:

Answers

5
Pattiann,

This si not an easy question to answer because it is a complex question and there are a lot of if's and unknowns from the in formation provided. Although most informed Realtors will know the basics and be able to help you with some basic tax questions you should talk to a qualified tax consultant. You will only have capital gains on the lot if sold seperate unless you have not lived in the home for 2 of the last 5 years. The $250,000 is the amount over what you paid for the property originally and you can also take away from that gain any capital improvements, costs of purchase and cost of sale. If you sell the properties seperately you will not be able to claim the $250,000 exemption. If you do end up paying capital gains it is taxed at the rate of 15% of the gain. If you can get more that 15% more by seperating the lot off then it might be worth doing. I suspect that you'll want more than just enough to cover the taxes.

If you are looking for some good real estate advise I would only recomend a certified residential specialist(CRS). I know many CRS agents in the Portland area if you would like me to refer a great agent to you.
Web Reference: http://www.KlamathHome.com
0 votes Thank Flag Link Mon Apr 28, 2008
Thank you all for your informative answers!

Just to let you know my home and lot next door are separate. Building on the lot is a great idea, but we are moving to Bend Oregon,(due to a new job & kids need to be in school in the Fall) and we would like to sell the two pieces together so we can buy a new home there. I made a call to my CPA, and we'll see how it works out tax wise!! I would love to sell the two together if I can, but I'll leave it open for all options!

You are all great thanks!
0 votes Thank Flag Link Sun Apr 27, 2008
Pattiann
Do you need to sell right now?
Do you need to sell BOTH if you can split them?
Talk with a CPA about the tax implication, talk with a Realtor about the options, because part of the tax rules relate to in which tax year sales occur.
Good luck!
0 votes Thank Flag Link Sat Apr 26, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Mindy's answer is spot on...your tax situation can't be fully addressed by a real estate agent. Not knowing what your other income streams are, how much you owe on the property, etc., it's difficult to say.

That said...a few considerations:

To sell the house and lot separately, you will need to go through a lot segregation process with the City of Portland. Not too difficult, but will cost around $750 for the application, and will likely require a survey (~$2,000), then some additional fees to record a new deed and tax lot, assuming it's approved (likely, given the city's predilection for infill development).

It would be easier to sell the property intact, leaving the segregation process, costs, and due diligence with the city to the buyer. But you'd likely make more if that work were already done and the lots were separate. Now, we're back to the tax situation... :)
Web Reference: http://www.repdx.com
0 votes Thank Flag Link Sat Apr 26, 2008
That is an excellent question! I do think you should also get the advice of a tax accountant. They should have time to answer this since tax season is now over. Realtors shouldn't give advice other than selling real estate.
You should ask your realtor to have this property listed twice, one for the entire property and one for just the lot. On both listings, it should state that the two can be sold together or separately. That would require getting a CMA on each property and one for the combined amount. If your tax accountant says it would be more beneficial to sell them together, then you should understand the tax consequences before making the final sale.
0 votes Thank Flag Link Sat Apr 26, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer