MatthewBuskell

Hi,

I have been in the USA for 3 years now and it looks like I will be hear for another 18 months atleast.

The interestign situation is I could be coming into enough money to purchase a small home outright...

I currently live in MA and spend about $1100 per month on rent. It occured to my partner and I that if we get these funds we could purchase a house and the rent money would be saved....

Naturally I am open to general advice on this...however here are some general comments

- I have had advice not to purchase because it is cheaper to mortgage.

- I have been told not to purchase for a while becuase house prices in MA are going to fall.

Any thoughts?

Matthew


-

Pulaski

You mean "...cheaper to rent", don't you? and you're from the UK, right?

Closing costs (legal, bank fees etc.) on buying a house can be several thousand dollars, and the realtor's fees on selling are typically 6%, so even if prices are stable you can still lose a packet when you come to sell.

If you had decided to buy three years ago it might have made sense, but for 18 months I doubt it.

meauxna

Thoughts...yes. Applicable to you? Don't know.
re: purchase/mortgage, I'm guessing you've heard something like that. That's because you can itemize the mortgage interest and deduct it from your tax bill (in very simple terms). Some people like to have the mortgage interest deduction because it lowers their tax bill, even when accounting the earnings the money might make for them invested elsewhere.

As to your local market, I couldn't say. I'm guessing you're talking about a small to modest property. One option might be for you to keep it and manage it as a rental property if you want to hold it for long-ish term investment.

If it were me, I'd find a local mentor who's more familiar with you, your particulars and is money-saavy. Your local governments may also have some free information available to you.

frrussre

The Rule of thumb when buying property is: "You need to keep it for at least 5 years". As Pulaski pointed out, you will have 3-6% closing costs + when you sell 3-6% closing costs + 6% broker fee.

Lets say you buy a prop for $100,000 + $3000 closing costs =$103k then you sell. $103k (Cost to buy) + $3k (Sell closing) = $106,000 - 6% broker fee
$100k-$6k =$94k.
So you spent $106,000 & get back $94,000. That’s always assuming the value does not go down & you do not have any repairs.
You will save your rent $1100 per month for 18 months minus Real E tax's & water charges + utilities + Property Insurance.
I don't know the market where you live, but generally the RE market has stagnated or dropped in past few months

Guess the 5 year rule works, assuming the market is rising with inflation at minimum.

Conclusion, stick to renting. Put your cash in the best CD for 18 months.
Reg. Frank R.
Just my personal observations.

Jo Brayne

Usually the buyer pays closing costs from what I have been reading, so you wouldn't have to worry about that if you were selling. Sellers generally only pay closing costs if they want to sell their house really quick rather than for the best price. "seller will pay closing costs" will then appear in the ad or the terms and conditions of the offer.

I am going to be buying a house, but in TX instead of MA. We plan to live there for many years to come, and will most likely end up capitalizing on the market's slump just now. It is *perfect* timing for me to buy in the US right now. My house in the UK has more than doubled in value in the last 4 years, and the exchange rate is rising daily. The house market in DFW has seen prices falling or staying stagnant. Perfect!! An investor couldn't ask for a better scenario.

frrussre

Only a stupid buyer would pay the seller closing costs. Buyer pays buyers closing costs, seller pays sellers closing cost & transfer tax.

If property is valued at and sells for $200k + buyer pays sellers closing cost $200k + $8k = $208k. Are you saying the $200k prop is now really worth $208k. Or should buyer only pay $192k + $8k = $200k.

Sue your Attorney if he agrees to a contract with such stupid terms.

Please think about what your saying?
Reg. Frank R.

frrussre

Jo Brayne
You had better sell your house in UK before you leave the country. If you arrive in the USA & take up residence, thus keeping your home in UK as a non-primary residence 2nd home. Guess what, when you sell it, you will owe capital gains tax to the US Fed Government. The exemptions are only for primary residences & $500k.
Reg. Frank R.

Jo Brayne

I am not going to get into an argument but I will just say that I am not the one that needs to think about what they are saying.

And attorneys are not part of the housebuying process, not in Texas anyhow. All of what I've said has already been confirmed to me by several real estate agents. Get your facts straight and learn before you speak out or start slamming others, and get some manners while you're at it.

frrussre

Yes your right of course, RE brokers draw up the contracts in Texas.

But still only a stupid buyer would agree to pay sellers closing costs. Unless as I stated they buy the prop for less.

Don't sue the Lawyer, Sue the Broker.
Reg. Frank R.

Ps. Would not want to live in Texas.

Jo Brayne

Thanks for that, I am already aware of this. We wont be able to afford to move to the US until our house has sold here so we're all set. Thanks again.

ukemigrant

That sounds a bit dubious. If you're in the process of selling your home, because you need the money to buy a home in the US, when you move to the US, and you have to rent here in the meantime, how could you be liable for CGT? It's not as if you ** own ** two homes. If you owned two homes I could understand.

Sam.

Jo Brayne

It ain't going to be happening. Simple as that. I have already queried reliable sources.

Anyhow, what happened to addressing the topic starter's question? Why are you (not ukemigrant ) spittitng at and flaming me when it wasnt me that started this topic? I do happen to know what I'm doing thanks. If I need any advice on house buying I will consult my agent thanks. I just ignore those who are trying to stir up trouble in here anyhow.

ukemigrant

What does this statement mean? Are you referring to my post ?

What's not going to be happening?

Jo Brayne

hiya ukemigrant.

no, that was to the poster that was insisting that I would be liable for CGT. What you said was right. no worries.

frrussre

Once more, you will be liable for capital gains. Once you move to USA & take up residence, your rented or purchased home will become your "Primary Residence". Your home in UK will become your, "Secondary Residence" or holiday home. The $500k exemption on property sale, is only is only on your "Primary Residence".

Call the Federal Tax dept. There is a booklet on the subject. There is even an International Treaty between the USA & UK covering this subject. I will try to find the booklet #.

Reg. Frank R.

Ps. Jo Brayne:
My apologies, to you I was not suggesting you are stupid. I was rather harshly suggesting, the buyer should never pay the seller closing costs. Unless you are getting a cheap deal, "As is".
I shall put my arrogant attitude down to living in NYC for to long. Still off to the old country in 2 weeks, for refresher course in manners. Lets stay calm Lady's & gentlemen & try as Brits to help one & another.