Question: I am selling my house and the closing is set for Friday afternoon. The buyers need to move out of their home Friday morning and want to move their things into my house before the closing. Since we are closing that afternoon, it seems fine to me. Is there a downside?
Answer: It is never a good idea to allow a buyer to move into – or do remodeling work in – a house they do not yet own. While is all likelihood the closing will go as smoothly as everyone desires, there is always the possibility for last-minute glitches (the loan doesn’t go through, the buyer’s closing on the sale of another house for which they were depending on money doesn’t proceed on schedule, etc.). Plus, there is the rare buy real chance, especially if they are moving heavy objects or doing major remodeling, that the buyer will injure himself in your home; as the owner, you will be responsible. I always tell my clients to make me the bad guy; tell them you would love to accommodate their wishes but your attorney will not let you.
Question: When I moved here four years ago, we rented out our old house rather than selling it. I went to see an accountant recently, and he tells me that I will owe capital gains on the house when I sell. I thought you didn’t get taxed on capital gains when selling your primary residence, which this was for 14 years. Am I really out the tax break?
Answer: Alas, you have fallen into a trap increasingly snaring South Florida homeowners who have hung on to their old properties. Federal law allows homeowners an exclusion of up to $250,000 if single, $500,000 if married, from capital gains on the sale of a personal residence. However; the law states you qualify for this exclusion only if you have lived in the house for two of the five years. Had you sold three years after you moved, you likely would have been able to claim this exclusion. Now that it is four, however, the property is no longer considered your primary home for this purpose.
Question: I made an offer on a townhouse that I love. The seller accepted it. But when I told the real estate agent I wanted to make a few changes to the contract, she told me it was already a done deal. Is this true?
Answer: In some other states, you make the offer, it is accepted, and then you negotiate the contract to the satisfaction of both parties. In Florida, it is typical to make the offer by presenting a signed contract. Many people don’t understand that this is a binding legal document. You can still ask the seller to agree to your requested changes, but he is under no obligation to do so. Next time, avoid this problem by writing “subject to review and possible amendment by my attorney within three business days” at the bottom of the contract, then have your lawyer look at it.