Expert: Matt Heisler - 10/12/2007

Question
I have a two part question.  1) Would we need to pay any capital gains tax when we sell our 2ed home (yes, it is an investment property).  2) We are looking to buy a bank owed home and we were told to make the offer as clean as possible by listing just our bid price and seller pay closing cost.  In doing this we would have a good chance.  We were told that banks do NOTlike offers where a bid is based off any inspections to be done.  Would it be wise to have the house inspected but not a part of the bid?  I’ve known three people so far to have done deals with banks biding this way.  What is your take on no inspections?

Answer
Hello Randi-

1) Everyone's tax situation is different, and therefore I can't answer your tax gains question.  It depends on A) did you make a profit b) Were you married when you bought it, is it under both your names, c) Did you ever live there, how long, how long have you owned it, d) Do you have capital loss carryovers from prior years, and many other factors!!! but in general, income property gains are taxable.

2)Typically banks don't accept contingencies.  It sounds like you're preparing to pay in a blind auction.  Obviously, you're trying to buy a home at foreclosure to get a "deal".  The deal is in the risk.  The risk involved in foreclosure properties is high - failed septic systems, tax liens, termites, busted water pipes - all become your problem when you buy the property without an inspection.  The reality is the more foreclosures you do, the greater the eventuality of dealing with at least one of these issues - that's why they sell below market. Lastly, who is giving you advice?  The attorney representing the property?  Should you really listen to him? I would get a BUYER agent who's familiar in foreclosure sales. Since you're probably going to flip the property, have the agent cut you a deal on the selling end . You can get the representation you should have, and s/he gets two deals.  So get a good deal and buyer beware!!

Matt Heisler
Heisler & Mattson Properties.
matt_heisler@heislerandmattson.com