Q. Is it true that starting in 2013 if you sell your home there will be an additional 3.5 percent sales tax on the seller to help fund ďObamacareĒ?
A. No, itís not true. Even on the very few home sales involved, it wonít be 3.5 percent and it isnít a sales tax.
Youíd have to end up with more than half a million dollarís profit (thatís not sale price, just profit) on the sale of your home before this new Federal tax would come into effect. The tax wouldnít be charged on the sale price or on the first $500,000 of your profit, only on the remainder. However, thatís only for married couples. If youíre single, youíd owe this tax on any profit (capital gain) over $250,000.
Even then, it wouldnít apply unless your other income came to more than $250,000 ($200,000 for a single taxpayer). Therefore, at least 97 percent of us can relax about this. In fact, I donít see how itís going to raise much money.
That 3.5 percent figure has been running around along with the whole scare rumor, and the bad news is that itís really 3.8 percent. But by the time you have that kind of money, you probably wouldnít care anyhow. At least I shouldnít think so.
Q. My boyfriend is going through a divorce that started two years ago. We have been living in his marital home. To complete the divorce process, he has to refinance to get her name off the house. We have applied almost everywhere for a mortgage but with my credit score one point too low, 619, we keep getting denied. Is there anything you can suggest? How long does is take to get one extra point on your credit?
A. There are a number of ways to raise your credit score, especially by one point, but Iíd better send you to experts in that field. Look on nfcc.org for a local, nonprofit credit counseling agency, and ask get some free or low-cost advice.
If you buy while youíre still unmarried, I strongly recommend going together to a lawyer and working out an agreement about what happens with the house if you run into problems in the future. Think of it as sort of a non-nuptial agreement.
Q. We built our house in the 1970s when there was a natural gas shortage and it had to be all electric. It still is. It wonít be too long till we have to sell and move. Would you advise spending the money to convert to gas?
A. You can get local advice by asking a few real estate brokers who advertise in your neighborhood. In general, I suspect changing to gas may be one of the few improvements that would pay back dollar for dollar when you are ready to sell. At least it should help you sell more quickly.
Q. I put a deposit on a short sale condo and was accepted by the seller. Since then the real estate person has been dealing with the sellerís bank. The offer is fair as the place needs a complete makeover and ours was the highest bid. It has been 44 days and the sellerís bank still is requesting more paperwork. I would think there would be only three questions:
ü Did the seller accept the offer?
ü Has the buyerís mortgage been approved, and is their bank waiting to give them the money?
ü When is the closing so the sellerís bank can remove this old debt from their books?
Seeing as the seller has accepted the best offer, mine, could there be something else going on such as waiting for a better offer?
A. I suppose that could happen. Your deal isnít binding yet because thereís one more question: ďHas the sellerís bank approved the contract?Ē
Iím pretty sure thatís what youíre waiting for. Before they agree to remove the current mortgage and leave the property free for you to buy, the sellerís bank must OK the sale price. Thatís because the proceeds wonít yield enough to really pay off the debt.
You may well have offered best possible deal, and the seller may agree. But the bank doesnít look at this as an individual seller would. The person in charge of short sales may be also handling a lot of other properties or could be out on vacation. Your purchase might need approval by a committee that doesnít meet that often. And the bank officers making the decisions know they will have to answer to government regulators.
On the bright side: The federal government has just instituted some new procedures and standards aimed at expediting short sales. With any luck, that will move your deal along.
ü Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through askedith.com.
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