Knoxville Tennessee Real Estate Blog

It seems real estate is always a popular topic for discussion and when you watch one of those late night TV shows promising real estate riches with no effort, no money, and no credit on your part it becomes tempting to pick up the phone and dial that 1-800 number.

However having been in the real estate business in Knoxville, Tennessee for almost 29 years now I’ve seen firsthand when something looks too good to be true it usually is. There are no free lunches in real estate.

But with some planning, some searching, and some effort on your part (and mine) it is possible to find undervalued properties or properties needing some rehab or often only cosmetic work (typically paint and/carpet), buy them at a discount, rehab them, and either sell for a profit or make a rental out of it.

Below are before and after photos of one project an investor and I did last year.

This house is located on northwest Knoxville on Palmwood Drive; this is before:

We bought this house in it’s present condition for $71,000

And this is after our rehab, pretty much from top to bottom.

We sold it for $130,900 in just under 3 months counting rehab time.

That’s just one example of projects I’ve been involved in either with an investor or by myself.

If you’re interested in actually buying homes and reselling them for a profit I can help; call me before you dial that 1-800 number at 3:00 AM and buy a course that can’t hold your hand and advise you how to make money.

www.KnoxvilleMLS.com

Jim Lee, REALTOR®

April 17th (because of where April 15th falls you get two extra days to file) is right around the corner and federal income taxes are due on that date.

Tax time usually puts “how much do I have to pay?” and “how can I save some money?” at the forefront of our minds.

If you own a home in the Knoxville, Tennessee area and are searching for some tax breaks, selling your home is still one of the greatest tax breaks going thanks to the “Homeowner Gain Exclusion” law passed by Congress 10 years ago.

If you’re married and own a home you’ve lived in for at least 2 of the past 5 years you can sell that home (married taxpayers filing a joint return) and not pay any federal income taxes on the first $500,000 of capital gain.

Capital gain is the difference between what you bought it for originally and what you sold it for.

Single taxpayers can exclude up to $250,000 of gain.

But what if you own an upper bracket home and your gain is over $500,000?

It’s still a good deal for you to sell because you get the benefit of the first $500,000 being tax free and gains above that number are taxed at the long term capital gains rate of 15%.

So let’s say you have a gain of $700,000 when you sell; the first $500,000 is tax free and you pay 15% of the remaining $200,000 profit or a total tax of $30,000 on a $700,000 profit………….not bad.

There are some other options too if you for example, might want to keep your present residence and make a rental out of it.

You can form a Limited Liability Corporation (LLC) for a few hundred dollars, refinance to pull some equity out, sell your current home to your LLC,  rent it out, you still own it, and you then get to depreciate it over the next 27.5 years even though it may be appreciating in value (and likely will).

If you own a home in the greater Knoxville area and want to talk about some options you may have please give me a call and we’ll arrange a convenient time to sit down and talk about how you can have your cake….er, your home, still own it, buy another home, and save a ton of money in taxes.

* As a practicing real estate broker I do not give legal or tax planning advice but I know lots of very competent people who do. Together we can form a team to help you meet your finanical goals.

KnoxvilleMLS.com