Moving Equity to a New Apt
I wonder if anyone has any suggestions. I own a one bedroom in brooklyn and I want to buy a two bedroom in a different neighborhood. I have a good deal of equity in the old apt (around 250/280 K) as I bought it some time ago. I would however need to sell it to…
I wonder if anyone has any suggestions. I own a one bedroom in brooklyn and I want to buy a two bedroom in a different neighborhood. I have a good deal of equity in the old apt (around 250/280 K) as I bought it some time ago. I would however need to sell it to buy a new place. I only have about 60/70K in cash, and we are looking for something not more then 500K but putting alot of this equity in the apt again to keep outgoings low (our salary for both of us is about 130K)
Anyhow my question is, does anyone have advice about managing the sale/buy at the same time. How can this work. If I find somewhere I can put the 10% down at contract, and obviously want to put much more at sale, But I need to put my place on the market (it should sell quite easily although I can’t be sure, but the building has always done very well). I guess can I get a contract sealed with 10% down?) and does anyone have advice? OR do I need more cash in hand to start with 20%?
Thanks!!
In this market you may want to sell, then rent while you look. We have finessed the sell/buy dance twice, but that was in a strong market, and it was still a near thing. (we had to camp out for a week with friends, board our pets)
Talk to your mortgage broker about whether a lender will give you a mortgage in this situation. Mine said no, and so I sold, moved to a rental, then bought. Basically, you have to qualify for both mortgages at the same time or something along those lines.
Thanks Aishling for the info! I was wondering that and on the website it just said “like-kind” so I wasn’t sure. Our sale was not a personal residence…
I’ll keep in mind the exclusion for future sales… do you know the rule about how long you have to live there? Is it 2 out of 5 years?
amybnyc —
1031 exchanges are not available when the property involved is the taxpayer’s personal residence. in any event, given the large capital gains exclusion upon the sale of a personal residence ($250k single; $500k couple), it would almost never make sense to do a 1031 exchange, even if it was available…an exclusion is surely better than a deferral.
I hope this helps… when we sold and bought we did a “1031 Exchange” which defers all capital gains taxes on your sale leaving you more money now to invest in new property. You will need to pay taxes down the road when you sell next one unless you do 1031 again (and note capital gains taxes are pretty low now). There are time limits on a 1031 so that may be tricky for you given your timing question, but it is worth looking into. I think 1031’s are an underused and under-known opportunity.
Quick google came up with this link to info on 1031: http://www.1031.org/about1031/faq.htm
We used a company called IPEX here in new york who were our “qualified intemediary” and they were great! They handled everything and taught me what I needed to know. Make sure your closing attorney is in the loop from the beginning and you stay on top of timing etc. if you do it.
good luck!
FIrst I would go out and seriously look at place to see if price range you are talking about is realistic in neigbhorhoods you are considering.
Then I would have realtor or 2 over and get a serious appraisal of what your place should sell for.
If serious about a particular place – a realtor is going to ask if you need to sell your place 1st. Obviously if seller has someone without that contingency they will pick them 1st.
I would be reasonably sure that I will find places that fit my needs in my price range and then place mine up for sale to see how much interest/how easily my place will sell.
Yes, there can be simultaneous closings. But logistics and patience is required by all interested parties.
As you know, it’s a difficult market. Consult with your lawyer about the issues and perhaps put a contingency in the contract. Contingent upon timely sale of your unit.
You should be able to go into contract with 5-10% — just a point of negotiation with the seller.
But you would need to sell your place before you close to put the cash into the new place.
Another option, is securing a bridge loan for any interim period, though I’m not sure how that works for mortgages or how common it is.
You should be able to go into contract with 5-10% — just a point of negotiation with the seller.
But you would need to sell your place before you close to put the cash into the new place.
Another option, is securing a bridge loan for any interim period, though I’m not sure how that works for mortgages or how common it is.