"Playing" the Negotiating Game

Now that you've received an offer on your home you must have done something correct. But if you're not thrilled with all the terms of the offer, the next step is to begin negotiating those terms which are important to you.

The goal for any successful negotiation is for both buyer and seller to "leave the negotiating table" believing they got their way on some or all issues important to them. Listening to the advice of your CRS agent is key. Let them take the lead. They've done this many times before and know how to finesse the situation in your favor. Be certain to prepare before the negotiating begins by:

• Staying Relaxed. Your facial expressions and mannerisms can help set the tone for the buyers. They can also give you away. Above all, avoid any kind of confrontation.
• Compromising. You don't have to win on every point. Compromising on the less important items will help the buyers think about compromising as well.
• Keeping Everything in Perspective. Think about what points are truly important to you and ask your CRS agent to stress those items.
• Not Taking Things Personally. If a buyer finds an aspect of the house they don't like, it's not a reflection on you. Try to be objective about the situation.

If you take an hour or so to prepare beforehand with your CRS agent, you'll be much more relaxed during the negotiating and more satisfied with the results when you're finished.

Home Modifications for the Elderly

I received a letter last week concerning the planning for our future long-term care needs. I'm not peddling insurance but there was one section on home modifications that might prove interesting.

Simply click here and go to page 13. There is also a link from page 13 to AARP website which may have additional useful information.

IRS Tax Code Section 1031

I read an article over the weekend that described an opportunity for investors using the provisions of section 1031 of the tax code to complete a "tax-free exchange."

This is incorrect. While section 1031 does exist it is a situation where one property (relinquished) may be exchanged for a like-kind property (replacement) but the taxes due are "tax-deferred" until the replacement property is sold out right.

If you believe a 1031 transaction is for you, please check with your accountant or tax advisor before you proceed. If done incorrectly and audited by the IRS, this type of transaction becomes a taxable event with taxes due in that tax year.

Tax Consequences for a Home Sale

This week I received a repeat question concerning capital gains taxes incident to the sale of a home.

Here's what the IRS tax code states if the house you're selling is your personal residence:

• Once every two years a couple ($500,000) or single homeowner ($250,000) has a capital gain exclusion if the home being sold is your personal residence. Capital gains at the 15% rate will be due if these values are exceeded. Capital gains is the difference between the basis and the sale price. The tax is due upon sale in that tax year, not deferred.

The tax code was changed in 1997. The previous system was the one-time $155,000 exemption which allowed the capital gain to be deferred. This is no longer true.

Whenever you sell your home, you must file the appropriate tax forms for the year in which you sold your home, whether or not you realized a capital gain.