All Forum Posts by: Kenny Smith

@Michele Granata 

great question!  So currently I have my policy with liberty mutual. More and more insurance companies are adopting the specific coverage called "home share" coverage.  You need to make sure you have this coverage when house hacking.  It is not a landlord policy because you will still be living there.  Once you move out however, then you'd switch it over to a landlord policy.

If it was me, I'd work with an insurance broker who would go out and shop rates and this coverage with all the big insurance companies.  Best part, their fee is paid by the insurance company not you!  So it's a win-win in my book.

Let me know if you're looking for a good one, I have a guy I work with.

Anyone know of a good CPA around denver that focuses on real estate? 

Thanks!

Quote from @Matt Devincenzo:

It sounds like he may be applying a pro-ration to the exclusion, which there is a provision for. But that provision is for things like a job transfer etc that were out of your control...I also think they may only apply if you didn't achieve the 2 years, not if you did reach it and then 'lost' the eligibilty.

That said I'm also not a CPA/EA so hopefully one of them can help clear this up.

Yup, you are correct.

to give more context, I was well aware of the 2 year deadline this past year.  I would of had to sell it by June 17th of this year.  However, my building was condemned due to a large asbestos spill in March of this year.  Now that I think of it, I’m wondering if this is the exception.

if so, I’m wondering how long I have to sell the property after we are eligible to move back in?  They are hoping the abatement will be done by December of this year.  My unit has been uninhabitable since March.

thanks all for your feedback.

Quote from @Bill B.:

I’m. 99% sure 23.5 months doesn’t qualify for any tax savings, but I am not a CPA. Which means I hope I’m wrong or that’s a bad CPA.

Ps. Have you owned it exactly 5 years? (Was it your primary for only 1 year and then a rental for 4? Or was a primary for longer? Again, I don’t think it matter but more info for an expert who may weigh in later. I do know you only get a proration if it was a rental, so moving back in now for 2 years would only save you 40% (3 out of 7 years.)

Well, I bought it back in 2018.  And it was my primary until June 2020.  Next june it will be 4 years rented.  

Hey all,

I am considering on selling my condo next year.  At the time I sell it, I will have lived there 1 out of the last 5 years and renting out since moving out.

One of my CPAs said I can still be exempt up to $125k and not the $250k.  I thought it was all or nothing deal.  Meaning, if you don’t live there 2 out of the last 5 years, you’re exempt nothing.  If you hit that mark, you get the full exemption.

Anyone have experience with this, or can shed some light?  

Thank you much!

the "secret menu" in home lending...

If you didn't catch mortgage Mondays a couple weeks ago with David Greene, here's a recap!  Not all lenders are created equal. As a borrower it is really important you know what type of questions you need to ask your lender to ensure you are getting the product, rate, and service that best fits your situation.

Let's dive into some...

1. The Rate Schedule - this is a schedule of all the rates and the points that are attached to get that specific rate. So the question shouldn't be, "what do you have rates at?" The lender could be deceptive and give you the lowest rate, but that also comes with paying for discount points, or higher closing costs. The question should be "what is my break even point?" Meaning, maybe you take a higher right where the lender actually gives you credits back at closing. If you know you're going to refinance down the road, or you're not going to hold onto the property for long, you need to figure this out.

2. Which Rate is "On Sale" - when thinking about permanently buying down your rate, people don't realize that the cost to do so is not proportional. For example, buying down a rate from 7% to 6.5% may cost $5k, but buying it down from 6.5% to 6% may cost $15k. So you need to figure out what the sweet spot is, and that goes the same if you take a higher rate. Those credits you can receive back can vary as well. Figuring out the rate stacks, and "what's on sale" is something every good loan officer should be able to help you with.

3. Closing Dates - when you finally close on your property, you typically have the next month free of any type of mortgage payment. So if you close in July, you likely will not pay your first mortgage payment until September. However, verify with your lender if you close in say early July, you are almost getting two full months without paying a mortgage. Whether you're a flipper, investor, or everyday home buyer, if you are tight on funds, this could really help out.

4. Escrow Waivers - when you close on a house, your lender will typically set you up to pay for your entire PITI each month. Your principal, interest, taxes, and insurance. What a lot of people don't know is you can actually pay your taxes and insurances separately on your own. It can be a savings because lenders typically collect more in reserves than they need to pay your taxes and insurance for you. Maybe a 2-4 month buffer at closing, which can be a significant amount at closing. So the question here is "does this loan product allow for escrow waivers?"

These "secret menu" items could be a game changer for your next loan...

as we head into fall, don't forget about these...

When you buy a home, nobody gives you a "how to" manual. For the most part, most homeowners are uneducated of what needs to be done to maintain your home throughout the year.

It may sound monotonous, but routine maintenance on the home is CRITICAL. Letting certain things go can cost you thousands don't the road. Don't let this be you..

Here is just a sample list of important items to think about as we head into the fall/winter months.

1. Furnace Filter Change - if you have an HVAC system, it is critical that your furnace filter is changed out at least every 3 months. Without doing so, dirt and dust build up quickly and can cause your HVAC system to work harder and puts more wear and tear on it than needed.

2. Irrigation System Blow Out - if you have an irrigation system, ensuring all the water is blown out of your lines is very important. If there is any standing water in the lines, when the temperature drops below freezing, that water will freeze and expand, likely bursting the line while doing so.

3. Water Softener Change - if you live in an area where traces of lead affect your main water line, you could have a water softener. If you do, just like anything else, this needs to be changed out periodically. That will be determined by how bad your water is affected by lead. But, I would check every 3-6 months to see the condition of it and if it needs to be changed.

4. Winterize A/C - whether you have central a/c or a swamp cooler, it is almost time to start thinking about winterizing this. Again, forgetting to do so in something like a swamp cooler could freeze lines or cause mold/mildew buildup. If you have a central a/c unit, simply powering off the condenser may be all that is needed.

Do sellers have to disclose this...?

Whether you are a buyer or seller, the seller is required by law to submit what is called a seller property disclosure to the buyer, while under escrow. This disclosure is essentially a list of ALL of the features of the house, with the seller required to claim if they have any knowledge of any work, repairs, issues that are they are aware of.

So, this begs the question, what if there are issues going on with the house, but the seller has no knowledge of this?

This may be more common than most people think. A buyer moves into a home, the inspection came back clean OR the inspector missed a major issue with the house, the issue arises shortly after closing, and they immediately blame the seller.

The buyer reaches out to the seller and asked if they had any previous knowledge of the issue. If the seller had no prior knowledge of the issue, they are not held liable. Also, it is very important to distinguish the difference between assuming issues and proven issues. You can assume that if your home is built before 1980 and you have popcorn ceiling that there is asbestos in it. However, if it has never been tested, you don't know for sure and do not have to claim that as a seller.

If the seller DID have knowledge of it, whether that is through their own experience with the issue or a contractor informing them, they can be held liable and the buyer even has means to sue them for damages.

If you are a seller, and whether it is a bug infestation, gas leak, foundation issue, etc, do the right thing and claim all of these on your seller property disclosure. Nobody wants to deal with a lawsuit after closing :)

@Henry Lazerow

Not trying to dog IL!  I am sure there are still opportunities out there.  I was just trying to make a point comparing CO to other higher property tax states, and how big of a difference it can really make.

@Chris Seveney

appreciate the feedback!  If only it was that easy..we will cash flow like crazy on this property when we move out..which we are shortly to buy another house hack.  Plus, we have a 3.3% rate on it..I can't get rid of that.