Simple legal question
- Thread starter pbslinger
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For application for college aid, I am being asked the value of real estate investments other than my home.
I own the lot next to my house. Is this lot a real estate investment, or is my home on two lots.
Thanks
I own the lot next to my house. Is this lot a real estate investment, or is my home on two lots.
Thanks
john traveler
Member
If you pay property tax on that lot, and the lot your house is on has it's own property tax, it is an investment.
BarbC
Member
I think you would have to make an application to merge the lots if you want to pay the taxes on the same tax bill.
Amici
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It won't make that much difference, as the merged lot will have a value similar to the lots individually.
The savings in taxes will be more than offset by the cost of the merger AND the cost to undo it when you want to sell the other building lot.
The savings in taxes will be more than offset by the cost of the merger AND the cost to undo it when you want to sell the other building lot.
There are, as you see, no simple legal questions.
I disagree. According to Internal Revenue Code Section 121 and/or its various interpretations, if you sold the lot with the house and the vacant lot at the same time, you could take advantage of the extremely favorable primary residential gain exclusion rules on both pieces of property independent of their real estate tax status. I think you're safe with the home on two lots scenario.
Brian~
CAJUNLAWYER
Member
I know what I would tell you face to face ...in a field...with nobody around....but I ain't sayin' it on the internet.
CAJUNLAWYER
Member
Yes
The question is simple but the answer is not-lots of things come into play involving federal law (IRS regs as well as the FAFSA rules) as well as state and local laws. I know how to answer regarding Louisiana but not MO. Check with your CPA. The answers and issues are VERY fact dependent and subject to different interpretations depending on who you ask.
Amici
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But the OP is primarily interested in how to define the two lots for his student loan application, which is a far more imminent situation than the tax implications of what appears to be a purely speculative sale scenario.
The most immediate issues would be property taxes and the cost of separation/combination, if done.
The most immediate issues would be property taxes and the cost of separation/combination, if done.
CAJUNLAWYER
Member
Actually a false statement on all those forms is grounds for Fed Indictment if done intentionally to mislead with criminal intent. So before one makes a statement, he better be sure it's grounded in fact and good faith belief in the position that can be backed up. What is the definition of "held for investment"? Believe me It can get complicated. I'm not trying to drum uop business or just postulating on how many angels can dance on the head of a pin. You CAN be prosecuted successfuly for WIllFUL Ignorance-I've defended people and it can be brutal and cost a pot on $$.
Smithfan
Member
I'm not an attorney, but I think the best thing you can do is, as has been suggested, talk to your CPA or to an attorney who specializes in real estate matters.
In California, if you paid only one tax bill for all the property, then it would by definition be your primary residence. If, however you paid two separate property tax bills, then by definition the properties were subdivided at some earlier period, and you own two separate parcels. Once you subdivide, you can't "un-divide".
Whether the second lot qualifies as an "investment" is another matter. If it's now worth less than you paid for it, you possibly could look into taking a capital loss -- but such a move would by definition make it an investment.
Good luck with it.
Bill
In California, if you paid only one tax bill for all the property, then it would by definition be your primary residence. If, however you paid two separate property tax bills, then by definition the properties were subdivided at some earlier period, and you own two separate parcels. Once you subdivide, you can't "un-divide".
Whether the second lot qualifies as an "investment" is another matter. If it's now worth less than you paid for it, you possibly could look into taking a capital loss -- but such a move would by definition make it an investment.
Good luck with it.
Bill
HOUSTON RICK
Member
The only correct answer to any simple legal question is:"It depends".
Jerry N.
Member
As a CPA, I don't answer legal questions, but I can give you my opinion. Fill out the form both ways and I doubt it will make any difference. If you have a good job and a house, you're not going to get much in student aid. Some real estate in your portfolio isn't going to take you from getting a full scholarship to getting nothing.
ElToro
Member
is that before or after "definite maybe" ?
