Bought a House Through Real Estate Agent !

[HTSS_TR]

In the other topic I sold my previous house without any agent involved, the process went smoothly through Escrow without any problem. I save some good chunk of money for not paying any commission to anyone.

I then bought a smaller house in the neighbor city of Lake Forest, this time I go with agents to get some commission rebate. An agent is a distance relative (she is the sister of my brother-in-law wife) and her partner gave us $3k rebate in the form of credit when we close escrow in 3 weeks. They have to pay their broker 30%, then give us 30% of the remaining and each of them gets 35%.

If the house was sold by seller without agent, I would be able to get lower price than I have to pay, but it was listed with an agent so I had no choice other than get myself an agent to get some rebate.

The whole process of selling and buying the houses was pretty painless. It took sometimes to do research to find the right house in the right location, but in the end we got what we want.

My agents didn't have to do much, I already view the house during open-house the week before, they just submitted a purchase offer then a counter offer. The seller accepted our counter offer right away. So our agents just do few more paper works and done. In total they spent less than 8-10 hours and get paid for than $3k, more than $300 per hour for each.

 

[Mackelroy]

Well you know, realtors are 100% commission, they don't sell they don't eat, so a big easy score lessons the fasting down the road during difficult times, and they do come.

 

[Vikas]

I always thought that one has to buy more expensive next house to be able to defer paying taxes on the gain on the sale of the previous house. Is it not the case? Does uncle sam allow you to keep the gains on selling your primary home?

 

[R_W_M]

Originally Posted By: Vikas
I always thought that one has to buy more expensive next house to be able to defer paying taxes on the gain on the sale of the previous house. Is it not the case? Does uncle sam allow you to keep the gains on selling your primary home?


Yes. Capital gains on a home sale are tax free up to $250K ($500 K joint return)

 

[threeputtpar]

Originally Posted By: R_W_M
Originally Posted By: Vikas
I always thought that one has to buy more expensive next house to be able to defer paying taxes on the gain on the sale of the previous house. Is it not the case? Does uncle sam allow you to keep the gains on selling your primary home?


Yes. Capital gains on a home sale are tax free up to $250K ($500 K joint return)


And it must be your primary residence for 2 of the previous 5 years to qualify for taxable exclusion.

 

[HTSS_TR]

We have to pay Federal and State income tax for gain above $500k, I don't know the tax rate for this supposed to be long term "Capital Gain".

I posted this so if someone is in market to buy a house should request "Commission Rebate" from his/her agent(selling agent).

California property tax law gives some benefits to homeowner: If someone bought a house many years ago and his/her tax base is $300k but the house worth $1 mil, if he sells his current house and buys a replacement up to $1 mil his/her tax base for the new house will be $300k, not paying property tax on on the different of $700k is a good saving.

I don't know how property tax base will be if he/she buy a replacement house at more than $1 mil. Let say if the new house is $1.1 mil he/she will pay tax on $400k ($300k + $100k difference) ?

 

[Vikas]

That is very biased system. The property tax should be based upon the relative property value rather than what was paid for it 50 years ago.

 

[xfactor9]

Originally Posted By: Vikas
I always thought that one has to buy more expensive next house to be able to defer paying taxes on the gain on the sale of the previous house.


This is not true for a primary residence. It is true for investment property that you exchange under the IRS 1031 rule.

 

[HTSS_TR]

Originally Posted By: Vikas
That is very biased system. The property tax should be based upon the relative property value rather than what was paid for it 50 years ago.

You're right. Two similar value houses in California can have very large difference tax bills. The house bought 40-50 years ago can have a tax base of $100k and the next door neighbor can have a tax base of $1 mil if that house was purchased recently.