All Forum Posts by: Irina K.

Thank you guys for all the clarifications and advice.

BTW, read about Section 179 under which you can expense your capital expenses as well, but all in one year, the year when you had those expenses, with some exceptions, but appliances would qualify for Section 179, correct? Improvements to the land and a building would not.

Thank you Bill

After I bought a property, I had to replace the water heater right away as the old one was rusty and leaking. Of course I could not rent the property out without water heater being functional. Is it operating expense or capital expense?

Also the property did not have any kitchen appliances. Are they operating or capital expense?

Thank you,
Irina

>>Commitment and the Appraisal go hand in hand.
It is the only way to get mortgage. It means that if appraisal is high enough, bank will commit to giving you the mortgage. Bank can't commit until it determines the value of the property

>>financing contingency
Essential! It means that if you can't get a mortgage, deal is off, and you will receive your escrow money back. Without such contingency you can't get money back if appraisal comes low, and your bank would not approve the mortgage.

The bank that owns the property knows that you can't get a mortgage if appraisal is too low. So, if you have financial contingency, the selling bank most likely will work with you to bring the price to the appraisal level.