Posted by chris on June 17, 2005 at 11:16:38:
less than 1 yr in current prop…need to use appr. value. Hard $ will use current value of prop, not purch. price. Once current property sells, will have a lot to put as down payment.
hud home purch. as o/o is sold in less than 1 yr? - Posted by chris
Posted by chris on June 16, 2005 at 14:39:57:
It is my primary residence, and has been…also my 1st home. The market has increased so much though, that I put up fsbo, and have a buyer qualified to purchase the home. It can close in just 2 months. I have been looking for a new home and found another hud that I am interested in. Upon calling to see if I could buy as O/O, they said I had to own current home for 2 yrs. live in 1 yr then rent. What are the penalties if I don’t?
I know the other house can’t be purchased by me now, but should I work with the buyers and still own the current home longer? Decent profit off this house to kick start my investing, and I don’t want to lose the sale. Please advise?
Re: hud home purch. as o/o - Posted by KPC
Posted by KPC on June 16, 2005 at 17:29:59:
Check out hud.gov. Look under HUD Homes. I think if you bought a HUD repo as an owner occupant that one of the conditions was that you live in it for a year. They give owner occupants first whack at listings. If it is not sold in a short time frame, it is offered to anyone and no such restrictions apply.
hud home purch. as o/o is sold in less than 1 yr? - Posted by Dave T
Posted by Dave T on June 16, 2005 at 16:33:37:
I suspect that the answer you got came from a real estate agent. The 24 month rule only applies if you are looking for HUD insured financing. Since you no longer qualify as a first time homebuyer, there is no real advantage to going the HUD insured financing route anyway.
Apply for owner-occupied financing at your local bank. It is a HUD rule that you can not get a second FHA insured loan in less than 24 months after obtaining your first.
There really is no requirement to occupy your first home for a full year before you can obtain a new owner occupied loan from another lending source.
I wonder if you realize that the sale of your home will be a taxable event. If your holding period is one year or less on the day of settlement, your sale profit will be taxed at your ordinary income tax rate. If you are in the 25% tax bracket, then the tax rate on your sale profit will be 25%.
If you can delay settlement until you have owned your home at least one year and one day, then your sale profit will be taxed as a long term capital gain, at a rate of either 5% or 15% depending upon your taxable income.
Owning and occupying your home as your primary residence at least two years before selling, makes the first $250K of your sale profit (per taxpayer) tax free.
Re: hud home purch. as o/o - Posted by Dave T
Posted by Dave T on June 16, 2005 at 17:52:58:
KPC,
The HUD requirement is that the owner-occupant buyer have the INTENT to occupy the property for (at least) 12 months after purchase.
HUD does not actually require 12 months of occupancy. HUD recognizes that life circumstances change our plans. We get transferred to a different city, we have multiple births that immediately make our home too small, we have catastrophic events (for example, hurricanes Hugo and Andrew, major forest fires, west coast earthquakes and landslides, Florida sinkholes) that render our homes uninhabitable, or perhaps some medical necessity forces the homeowner to sell and move into a nursing home.
re: hud home - Posted by chris
Posted by chris on June 16, 2005 at 16:49:34:
dave,
thanks for the response. I called a hud office and got that feedback. But I hope it was in reference to hud financing. I need to sell the house now even if taxed to have working capital to invest on others. I know some here say and are right that no $ is needed to invest, but I think it opens deals that wouldn’t otherwise be available.
Because this is the first I (albeit stupidly) am willing to pay taxes just to have the cash. Once I do a few more, and have a decent amt. in the bank, I will try to keep one year then sell.
Re: hud home purch. as o/o - Posted by chris
Posted by chris on June 16, 2005 at 19:03:31:
thanks dave.
Re: re: hud home - Posted by Barry (FL)
Posted by Barry (FL) on June 16, 2005 at 17:54:28:
If there is that much equity, why not just get an equity line and use that. You could still live in your primary and stay there 2 years to cancel the taxable event of the sale, have a deduction of the interest with the HELOC and still have someplace to live.
Hope This Helps,
Barry (FL)
Re: re: hud home - Posted by chris
Posted by chris on June 16, 2005 at 19:01:13:
Credit isn’t good enough for a heloc. The other prop. won’t make it to investors…i believe. I will go to hud website now. But even if I don’t buy the other hud prop. Should I be worried about selling my prop in less than 1 yr ownership? It will be short by 3 months when sold. I don’t want to lose the buyers as I believe they are paying top dollar for it.
Re: re: hud home - Posted by Dave T
Posted by Dave T on June 17, 2005 at 10:59:59:
Chris,
If credit is enough for a new mortgage to purchase another property, then why isn’t your credit good enough to obtain a home equity loan? Isn’t a HELOC easier to get than a new first mortgage?
If you don’t have enough equity in your primary to keep your combined LTV with a home equity loan below 80%, then I understand the rationale behind your strategy.
I wouldn’t worry about selling it… - Posted by Barry (FL)
Posted by Barry (FL) on June 16, 2005 at 21:42:48:
it’s an intention thing.
Hope This Helps,
Barry (FL)