Q: We hired an agent two weeks ago to sell our home, and our first open house is scheduled for next weekend. We were planning to stay for the event and help show visitors around, but our agent says it would be better if we spent the afternoon somewhere else because being present for the event might hurt our chances of making a quick sale. What do you think?
A: I think that you should follow the agent’s advice and stay away from your home while the open house is happening.
A key to holding a successful open house is to make visitors feel comfortable enough to slowly ramble through the property and to ask the agent lots of questions. But if the sellers are present, many home-buying prospects will cut their visit short because they feel like they’re intruding or that their questions will make them seem nosy.
The less time a prospect tours a home, the less chance that he or she will make an offer to buy it.
Another reason why sellers should not attend their own open house is that, as numerous agents will attest, they usually don’t exercise much caution when they talk about why they want to move. Even a simple comment like “I love this place, but it’s time to move on,” or “We need to move because our son wants to go to a different school” might be misconstrued by potential buyers as a sign that they could do better by looking elsewhere.
I’m sure that you wouldn’t have hired your agent a few weeks ago if you didn’t trust his judgment, so you should follow his advice and be somewhere else when he holds your first open house next weekend.
Q: Who is the biggest property owner in the United States? I say that it’s Donald Trump, but my husband says it’s probably Bill Gates or some other high-tech billionaire. Who is right?
A: Neither. The biggest property owner in the U.S. is our federal government, which owns more than 700 million acres of land — from the forests in Alaska to parts of the Everglades in Florida.
Q: My wife and I bought a home in October, and the county charged us almost $900 in “transfer taxes.” Can we deduct this cost on our upcoming tax return, just like the annual property taxes we pay?
A: Sorry, but the answer is no. Although the Internal Revenue Service will allow you to deduct any property taxes that you pay in a given year, it prohibits write-offs for transfer taxes levied by a local assessor or other government agency as part of a sales transaction.
Most cities and counties now charge transfer taxes when a property is sold. Such taxes were originally created to reimburse the local government for the cost of updating its public records, but now the levies are often used to fund a variety of programs — from food banks that serve the homeless to health care centers for illegal immigrants and other low-income people.
Although you cannot deduct the transfer taxes you recently paid on your upcoming tax return, you can add the amount to your “cost basis” of the home and thereby reduce any taxes on the resale profit.
Q: The house that my husband and I purchased almost 20 years ago is now worth about $200,000 more than we paid for it. We are interested in forming the type of inexpensive living trust that you recently wrote about so our two kids will not have to waste a lot of money and time in probate court after we die. But if we put our home into a trust and then decided to sell when we retire in a few years, would we still be able to keep all of our resale profit tax-free?
A: Yes, all of your profit would remain tax-free.
The IRS allows married couples to keep up to $500,000 (or $250,000 for singles) in home-sale profits away from taxation, provided that the property has been their primary residence for at least two of the previous five years.
Provided that you still meet the IRS two-out-of-five residency rule when you retire and sell, you will be eligible to keep up to a half-million bucks in resale profit tax-free even though title to the home would be held in a money-saving trust instead of in your personal names. Meantime, you also would retain all of your current housing-related tax benefits, such as the ability to deduct all of your payments for mortgage interest and property taxes.