Real Estate Crash thread

[Foggy_Goggles]

Does SALT affect mortgage interest or just taxes? I thought interest was excluded from SALT? I probably know nothing. My mortgage and taxes are cheap and my CPA handles that stuff.

[54-46]

SALT (state and local taxes) is limited to 10k. You can still beat the standard deduction with interest paid, right? Which is what FG was asking?

Yep. My SALT + interest even exceeds Head of Household deduction of $18K.

[Hopeless Sinner]

Yep. My SALT + interest even exceeds Head of Household deduction of $18K.

Ok thanks for the correction. (I know I'm supposed to keep arguing, etc as per PR rules, I just don't have it in me.)

[Danno]

I'm just a lowly dentist, but with the standard deduction being 24k filing married, there hasn't been a mortgage interest deduction for me in however many years since they raised it to 24k. Maybe I am not understanding what y'all are discussing, but when I go through TurboTax or FreeTaxUSA, and enter my mortgage interest and property taxes and all that stuff, it doesn't equal the standard deduction. So no tax benefits to owning vs renting for me. Again, if I understand what this discussion is about.

[altasnob]

My friend here in Tacoma wants to sell his home, buy a boat and live on it (instead of renting) and then buy a house down the road when the market goes down. His logic being the first 250k (500k if married) of capital gains on your personal home are tax free. He's only lived in his house for five years but Tacoma has been one of the hottest markets in the country, so he has about 250k in gain right now. If he stays for another decade, and makes say, 750k of gain, he has to pay capital gains tax on the amount of above 250k. So this law offers an incentive to move once you've made 250k gain in your house. Realtor fees, excise tax, and other costs of selling your home are deducted from the capital gains amount, so more like 275k gain and then it is time to move to a new house and restart the tax basis.

[Ted Striker]

Not a terrible idea, except for the boat part.

[Hopeless Sinner]

I'm just a lowly dentist, but with the standard deduction being 24k filing married, there hasn't been a mortgage interest deduction for me in however many years since they raised it to 24k. Maybe I am not understanding what y'all are discussing, but when I go through TurboTax or FreeTaxUSA, and enter my mortgage interest and property taxes and all that stuff, it doesn't equal the standard deduction. So no tax benefits to owning vs renting for me. Again, if I understand what this discussion is about.

Yes you're correct. The total of your itemized deductions would need to be greater than $24,000 in order to use the mtge interest deduction.

[Hopeless Sinner]

My friend here in Tacoma wants to sell his home, buy a boat and live on it (instead of renting) and then buy a house down the road when the market goes down. His logic being the first 250k (500k if married) of capital gains on your personal home are tax free. He's only lived in his house for five years but Tacoma has been one of the hottest markets in the country, so he has about 250k in gain right now. If he stays for another decade, and makes say, 750k of gain, he has to pay capital gains tax on the amount of above 250k. So this law offers an incentive to move once you've made 250k gain in your house. Realtor fees, excise tax, and other costs of selling your home are deducted from the capital gains amount, so more like 275k gain and then it is time to move to a new house and restart the tax basis.

Ah, hard no.

[Core Shot]

Wtf. Dudes single. And wants to live on a boat
You old Fucks need to cheer him on.
Boat. RV. Same shit. Live the dream. Buy the dip. Sell the top.

[Name Redacted]

My friend here in Tacoma wants to sell his home, buy a boat and live on it (instead of renting) and then buy a house down the road when the market goes down. His logic being the first 250k (500k if married) of capital gains on your personal home are tax free. He's only lived in his house for five years but Tacoma has been one of the hottest markets in the country, so he has about 250k in gain right now. If he stays for another decade, and makes say, 750k of gain, he has to pay capital gains tax on the amount of above 250k. So this law offers an incentive to move once you've made 250k gain in your house. Realtor fees, excise tax, and other costs of selling your home are deducted from the capital gains amount, so more like 275k gain and then it is time to move to a new house and restart the tax basis.

You only pay taxes on the amount over $250K. Also, take a year off work and make less than $40k and you still would pay 0%.

[Hopeless Sinner]

Wtf. Dudes single. And wants to live on a boat
You old Fucks need to cheer him on.
Boat. RV. Same shit. Live the dream. Buy the dip. Sell the top.

If he said he wanted to cruise SE AK for 6 months and drop down to Cabo San Lucas for another 6 months - go for it!

Avoiding taxes is not a way to plan your life, but I'll play.

Ok what's the live aboard boat market like? How available and how much is slip rental? Buy now at top of the market sell later when RE and boat market crashes.

[Benny Profane]

Wtf. Dudes single. And wants to live on a boat
You old Fucks need to cheer him on.
Boat. RV. Same shit. Live the dream. Buy the dip. Sell the top.

Only in Florida.

[neufox47]

My wife wants us to sell, to grab the peak of this wave, and rent for a while. I tried to tell her that a bunch of message board experts don't have a consensus of whether this is peaking or not. She didn't buy it.

Some friends of ours sold in late Fall because they thought values were inflated. They rented for a while, and just scored jobs in a mountain town and are moving. So to her, that data point of 1 means we should try to do the same.

The zestimate on that friend's house (that closed in December) has already gone up ~$45,000 since they sold.

You seriously need to compare the costs of selling / renting for her. You’d have to nail the timing to make out, like totally nail it. An acquaintance did this and sold, closing right before Covid really hit. They were pumped and thought they made out. Fast forward a year and they ended up buying in the same area, spending 15% less to get a house that was about 60% as good as the old house. In the meantime they spent about $30k on rent and $10k on moving. Plus transaction costs of 5%. They lived in rentals way shittier than their old house.


Add up the costs of selling, buying, renting, moving twice (or more), and see how much the market has to drop to break even. That’s assuming you do this at the top. But the market may go up another 10% after you sell. The ONLY way this is remotely a good idea is if you planned to sell anyways. Then all your transaction costs are sunk costs anyways.

[MontuckyFried]

The ONLY way this is remotely a good idea is if you planned to sell anyways.

BINGO!!! Planning on relocating from Boulder to Cleveland for work? Go for it then, buddy. Planning on staying in the area? Yeah, have fun with that.

Like neufox said, you're gonna get nailed on transaction costs, which makes it tough to even make a lateral move.

[schuss]

Wtf. Dudes single. And wants to live on a boat
You old Fucks need to cheer him on.
Boat. RV. Same shit. Live the dream. Buy the dip. Sell the top.

Yeah, if he has the logistics worked out and is accustomed to boat stuff - great. If he's a landlubber who thinks "living on a boat would be cool!!1" - maybe not. Knowing people that live on boats full time (actual ones, not the permanently moored ones), it can be tough and expensive if you don't know what you're doing.

[Benny Profane]

[skiballs]

Thinking it’s time to sell the house in the DC suburbs, 1ac on a golf course.
Wonder if I can get a million for it.


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[MontuckyFried]

Krystal's conclusion is spot on: No matter what the outcome, regular folks are getting FUKT!

It is insane that these investment firms are running around snatching up everything like they are. Yup! Our new "Slumlords" is right. But I also think she's right in that it's quickly becoming a house of cards. There's going to be a tipping point at which point the investors will panic and dump assets, and thus those first dominos shall begin to tip over.

Folks, don't get swept up in this madness. Do NOT overpay. If you feel comfortable paying X amount for a place you want to be. Sure. That's fine. But also be ok with the fact that you may end up underwater for a while too if/when things collapse. We as a country really need to stop trying to compete with these investment firms. Stop getting in these asinine bidding wars. Be brave enough to walk. I've never upped my price over initial offers when multiple people made offers. I always won. Dirt pimps just LOVE telling people that there are multiple offers so you "better make a strong offer!" It's an annoying tactic they use to get people to preemptively pump up their offers, even though they have zero clue what the other offers even were. Kinda like War Games, sometimes the only winning move is not to play. I used to love real estate. It's one of the few things I've been good at in my adult life, but screw this noise. I'm out until things calm down.

[schuss]

Eh, I don't think they'll actively dump as a big problem right now is that capital has nowhere to go. VC is overpumped, Real Estate is overpumped, etc. etc. because there's been effectively zero mechanisms to reduce wealth accumulation and they have many more tools to accelerate it. A regular person has no chance against the scope and scale of these ops, and with regulatory capture of especially GOP legislation writers (note - plenty of corpro dems as well), there's few to no mechanisms out there making things better for normal people.

[Mokomahonah]

Woman's name is Krystal Ball... Is that some sort of joke?

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[Ted Striker]

If he said he wanted to cruise SE AK for 6 months and drop down to Cabo San Lucas for another 6 months - go for it!

Avoiding taxes is not a way to plan your life, but I'll play.

Ok what's the live aboard boat market like? How available and how much is slip rental? Buy now at top of the market sell later when RE and boat market crashes.

Exactly. If it's about lifestyle, hey, it's his life. But if it's an exercise in wealth creation/preservation, bad idea.

It's called a property ladder for a reason.

[Kinnikinnick]

Market gone wild. 10% above listing becoming the new sales price on anything nice.


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[Ted Striker]

Eh, I don't think they'll actively dump as a big problem right now is that capital has nowhere to go. VC is overpumped, Real Estate is overpumped, etc. etc. because there's been effectively zero mechanisms to reduce wealth accumulation and they have many more tools to accelerate it. A regular person has no chance against the scope and scale of these ops, and with regulatory capture of especially GOP legislation writers (note - plenty of corpro dems as well), there's few to no mechanisms out there making things better for normal people.

Hit the nail on the head.

[Flounder]

Whelp looks like we’re getting screwed with this market. New tax assessment came in the mail yesterday.

The current appraisal was done last year after we got the CO for the renovation. 270k to 448.8k in a year. Talk about over improved for the neighborhood, highest on the block now. The scary thing is it would probably sell for that amount right now which would cover everything we’ve done to the house and pay us nicely for all the labor we put in.

Any advice on challenging the assessment? Looks like our condition is rated as very good while most neighbors are average to fair. No plans to sell, good size and location for retirement.

[dan_pdx]

Whelp looks like we’re getting screwed with this market. New tax assessment came in the mail yesterday.

The current appraisal was done last year after we got the CO for the renovation. 270k to 448.8k in a year. Talk about over improved for the neighborhood, highest on the block now. The scary thing is it would probably sell for that amount right now which would cover everything we’ve done to the house and pay us nicely for all the labor we put in.

Any advice on challenging the assessment? Looks like our condition is rated as very good while most neighbors are average to fair. No plans to sell, good size and location for retirement.

How TF is this going to be revenue neutral for the city government? Did some other lucky homeowner get the value of their home reduced by a comparable amount? How is that possible in this market? If you think it would actually sell for that amount right now, seems like it would be hard to mount a successful challenge, but I'm just a dentist who doesn't know anything about real estate.