Should you Sell your Queens Property with or without Tenants?

   Realtor & Co-Owner of the Queens Home team at Keller Williams Realty
So you own a rental or investment property in Queens and you’ve determined that now is the right time to cash out or move on to your next investment. Being the savvy investor that you are, you have leased your property to tenants who have been helping you pay down the mortgage. Now is when the question arises, should you list the property with your current tenants occupying the unit, or wait until they move out? Here in Queens we see this all the time, and we personally have sold a lot of tenant occupied properties, enough to see the good, bad, and ugly side of doing so. As a result, there are different schools of thoughts on the issue, and the right answer will depend on your property and your priorities. Below we’ll highlight some of the advantages and disadvantages to each approach so you can have a full picture of the issue and potential benefits/consequences.

Listing with Tenants

imagesThe biggest advantage to listing with tenants is continual receipt of your rental income. This ensures that there is minimal impact to your finances in the short term, and it alleviates the pressure of needing the property to sell right away. If your target buyer is an investor, then they may look at the occupancy favorably, especially if the rental income is high and you can show proof of consistent collection. In our experience, selling with tenants is a good idea if your tenants are very cooperative, and if you are receiving a market rate of rental income. If either of these is not the case, then you can run into several issues that can potentially get very ugly, and take a long long time to resolve. Unfortunately we have experienced this first hand and the person who ends up losing the most is usually the Seller.

The biggest disadvantage to listing with tenants, is usually a lower listing price. If the property can be delivered vacant and tenants are cooperative, you may be able to still market the property at a competitive list price, however, it is always harder to show the full potential of a house when it’s occupied by tenants, because you can’t do the renovations, touch-ups or staging needed to showcase the home. All of these factors limit the price you can ask on the property, or if you list competitively to other properties, this factor will most likely be reflected in the offers you receive. In addition, it’s always unclear if the tenants will be cooperative with open houses and viewing appointments until you actually start the selling process so when selling with tenants, there is a certain unpredictable variable that comes along with it. Lastly, many new homeowners don’t want to deal with tenant evictions, especially here in Queens, so if you decide to sell your property with the current tenants, you may limit the buyer pool to mostly investors.

Listing without Tenants

Vacant PropertyWhen listing your investment or rental property without tenants, it becomes like most of other properties on the market, and many times more attractive because in Queens, most homeowners opt to sell with tenants. More importantly, you can attract a bigger pool of buyers— investors and non-investors alike. Selling without tenants allows you to first update the property as needed which ultimately lets you garner the highest listing price possible. Staging a vacant property is pretty straightforward, but just being able to do so makes a huge difference that is usually reflected in the speed and strength of the offers received. It is also easy to show, because it will be vacant (not owner or tenant-occupied), so the property can receive as much traffic as possible. In our experience, whenever we’ve sold investment properties without any tenants, the properties have sold much quicker, and for way over asking price. Reason why, because most rental properties sold in Queens are not sold vacant, so for most buyers, there is usually a tenant factor involved. As a result, when you are selling a vacant investment property in Queens, you get a lot more activity, and much higher offers because there is a lot of value in that kind of piece of mind.The main challenge with listing without tenants is the planning that goes into the process. You first have to deliver the news to the tenant—hopefully the lease is at a month-to-month stage. Remember to check your rental agreement on the notice requirement. There will be a lag time between when you provide notice and when the property is ready to be listed—renovations, touch-ups, repairs and staging all take time. Because you won’t be receiving income from the property while the it’s vacant or listed, it’s important to plan for the financial shortfall during those weeks or months.

Conclusion

You have many factors to consider when deciding to sell your investment rental property. Be sure you’re working with a qualified real estate agent who can guide and assist you through this process. Rest assured that we here at the Queens Home Team have sold several investment properties, both with or without tenants, and we have developed a system to ensure success either way. In our professional opinion, selling without tenants is always the best bet because you can guarantee the highest sale price possible with little to no headaches. This is not always possible for homeowners, so if you do decide to sell with tenants, you just need to make sure you take all the necessary steps to ensure a smooth transaction.
Blog & site courtesy of George & Abigail Herrera with the Queens Home Team at Keller Williams Realty Landmark II
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How Much does it Cost to Sell a House in Queens NY?

Seller Closing Costs in Queens NYC1-3 FAMILY HOMES

We meet with homeowners & potential sellers every week, and one of things we always do is go through their estimated net seller proceeds once we have appraised their property. This is extremely important because there are several closing costs associated with selling real estate here in Queens NY. With that said, below is a list of these expenses so that you can have an idea of what costs are involved when you sell a property in Queens. Many of these costs depend on the actual sale price so if you are curious what your closing costs might be, download our Estimated Net Seller Proceeds worksheet.

Click Here for a Free Appraisal of your Home

A. New York City Transfer Tax:

1% of sale price (for sale prices up to $500K)

1.425% of sale price (for sale prices over $500K)

B. New York State Transfer Tax:

$4 for $1,000 (or .004%) of sale price

C. Brokerage Fees:

Typically 4-6% in Queens

2-3% to Listing Broker

2-3% to Buyer’s Broker

D. Seller Attorney:

$950 and up

E: Residential Deed Transfers:

$75

F. NYS Equalization Fee:

$75

G. Miscellaneous Title Fees:

$200 – $500

H. Pick-up / Payoff Fee to Title Closer:

$100 – $300

I: Mortgage Payoff

Ask your bank/lender for a payoff balance or letter, and don’t forget to include any additional home loans, lines of credit, home equity loans, etc.

Click Here to Download our Estimated Net Seller Proceeds Worksheet for Residential Homes

 


COOPS

Queens CoopsA. New York City Transfer Tax:

1% of sale price (for sale prices up to $500K)

1.425% of sale price (for sale prices over $500K)

B. New York State Transfer Tax:

$4 for $1,000 (or .004%) of sale price

C. Flip Tax

Vary by development (Can be a % of sale price, % of profit, flat fee, or assessed by amount of shares)

D. Stock Transfer Tax:

$.05/per share

E. Brokerage Fees:

Typically 4-6% in Queens

2-3% to Listing Broker

2-3% to Buyer’s Broker

F. Seller Attorney:

$950 and up

G. Co-op Attorney:

$450 and up

F: Non Deed Transfers:

$50

G. NYS Equalization Fee:

$75

H. Pick-up / Payoff Fee to Title Closer:

$100 – $300

I. UCC-3 Filing Fee:

$100

J: Move-out Deposit/Fee:

Vary by building. Move out deposits are typically refundable as long as you don’t damage anything during your move, however, if it is a fee, it may not be refundable.

K. Miscellaneous Coop Charges:

Vary by development, check with your Coop’s management company to verify.

L: Mortgage Payoff

Ask your bank/lender for a payoff balance or letter, and don’t forget to include any additional home loans, lines of credit, home equity loans, etc.

NOTE: For sponsor units in Coop developments, the Purchaser will typically pay costs normally paid by the Seller (most common are Transfer Taxes).

Click Here to Download our Estimated Net Seller Proceeds Worksheet for Coops

 


CONDOS

Queens CondosA. New York City Transfer Tax:

1% of sale price (for sale prices up to $500K)

1.425% of sale price (for sale prices over $500K)

B. New York State Transfer Tax:

$4 for $1,000 (or .004%) of sale price

C. Brokerage Fees:

Typically 4-6% in Queens

2-3% to Listing Broker

2-3% to Buyer’s Broker

D. Seller Attorney:

$950 and up

E. Processing Fee:

$450 and up

F: Residential Deed Transfers:

$75

G. NYS Equalization Fee:

$75

H. Pick-up / Payoff Fee to Title Closer:

$100 – $300

I. UCC-3 Filing Fee:

$100

J. Miscellaneous Condo Charges:

Vary by development

K: Mortgage Payoff

Ask your bank/lender for a payoff balance or letter, and don’t forget to include any additional home loans, lines of credit, home equity loans, etc.

NOTE: If your condo is in a new development or very high demand area, you can ask the buyer(s) to pay costs normally paid by the Seller (Most common is Transfer Taxes)

Click Here to download our Estimated Net Seller Proceeds worksheet for Condos

Blog and site courtesy of George & Abigail Herrera with the Queens Home Team at Keller Williams Realty Landmark II.

George and Abigail Herrera_Queens Home Team at Keller Williams Realty 2_HEADSHOT_ROUNDBUY: www.exclusivequeenshomes.com | SELL: www.queenshomeselling.com

*Please note that these are estimates and that Queens home sellers should consult their real estate attorney or financial advisor for specifics. We do not represent that these are the entirety of potential costs, but are only to be used as a guide.

Original Article: http://blog.queenshomeselling.com/blog/how-much-does-it-cost-to-sell-a-home-in-queens/

Guide to Real Estate Taxes in Queens NY

George Herrera Keller Williams_HEADSHOT_ROUND by George Herrera, Realtor & Co-Owner of the Queens Home Team at Keller Williams Realty.

Selling Queens real estate can be a very complicated process—just as complicated as purchasing real estate in Queens—particularly from the perspective of taxes and exemptions. So, the following is a list of various potential queens real estate taxes and exemptions that Queens home owners should be aware of when deciding to sell a home, coop, or condo in Queens. For your reference, we’ve included a brief summary of each, however, we always encourage speaking with a tax professional for information more accurate to your specific situation. If you have any questions, let us know and we can reach out to one of our CPA partners to see if they can help…

property-tax-house1

Taxes for Investment Properties

Many people find investing in real estate i.e. purchasing property for the sole purpose of investment, to be extremely advantageous. One of the most significant pluses is the fact that all mortgage interest paid on investment properties is fully deductible. There are some down sides, however, the largest one being that the loan origination fees and points he or she might have paid in order to lower the loan’s interest rate can’t be deducted.

The interest on loans that were used to purchase, construct, or improve upon the property are deductible up to $500,000.00 for single tax payers, and $1,000,000.00 for married couples. The interest accrued on home equity loans can be deducted up to $50,000.00 for individuals and $100,000.00 for married couples.

Click Here to Find out How Much your Queens Home is Worth

2-persons-transferring-somethingTransfer Taxes

When you sell a Home, Coop, or Condo in Queens, you will be subject to paying Transfer Taxes at the time of closing. There are two transfer taxes that you will be responsible for paying:

  1. New York State Transfer Tax – $4 for every $1,000 of the sale price or .4% of the sale price
  2. New York City Transfer Tax – 1% for sale prices up to $499,999 and 1.425% for sale prices $500K and up

When selling a property near the $500K mark, it’s important to keep in mind that you pay .425% more in taxes if the sale is $500K+.

Click Here for a List of Exclusive Homes for Sale in Queens NY

capital-gains-taxCapital Gains Taxes

Capital Gains are the profits that occur as a result of the difference between selling and purchasing price, on which sellers of a primary residence are taxed. The amount can vary based on a number of considerations, such as whether or not someone is a resident of the United States, and the current condition of the property. Deductions from Capital Gains include the fees for the loan application, closing costs, and the points that were paid for the loan to get a lower interest rate for the mortgage.

Generally, however, the taxes are 15% for residents of the United States who live in New York State. In addition, approximately 10% is added for city taxes. Some individuals will be able to qualify for not having to pay Capital Gains. If the house was the seller’s primary residence for 2 (at least) of the last 5 years, the Capital Gain can’t be over $250,000.00 for a single person or $500,000.00 for a married couple.

Capital Gains are reported on Schedule D of the IRS form. If the property has been owned for 1 year or less than 1 year, the owner reports it as a short-term Capital Gain. If he or she has owned it for longer than 1 year, it is a long-term Capital Gain. It is most advantageous for an owner to live in his or her residence for more than two years before selling it, because if they do, they will have more time to reinvest the Capital Gain from their home’s sale.

Click Here for a Free Market Report of your Neighborhood

LimitedLiabilityCompanyTaxes for Corporations

An LLC is a company formed between people who want to form a partnership in order to accomplish a specific project, or a few specific projects, without necessarily wanting to tie themselves to one another permanently or more lastingly. Purchasing a property is a perfect example of a situation where multiple partners may want to join together for one specific purpose. LLCs provide their partners with added protections and benefits, which makes it even more enticing to many people. One major advantage is that when the property is sold, the partners can, if so desired, transfer the property’s title to the LLC, which allows them to avoid taxes on the sale. After purchasing a new piece of property, the partners transfer the title to one of the partners so that it is in his or her name.

Click Here for a Free Appraisal of your Queens NY Home

Tax-exemptionsTax Exemptions

There are a number of situations in which tax exemptions are possible. If someone owns a home as his or her primary residence for at least two years but then has to sell due to an unavoidable circumstance that makes relocation necessary, such as a new job or health reasons (including when a person must sell his or her home in order to raise money for the medical expenses), a tax exemption is possible. In the case of health reasons, it’s advisable but not necessary for someone to keep a physician’s letter on hand, that describes personal information regarding the health problem, in case one is audited at some point.

One can qualify for a tax exemption due to “unforeseen circumstances.” The IRS defines “unforeseen circumstances” as “the occurrence of an event that you could not reasonably have anticipated before buying and occupying your main home.” Some examples include the ones listed above, as well as war, terrorism, natural disasters, separation or divorce, death, multiple births from a single pregnancy, and a change in employment status, leaving the owner unable to pay for his or her living expenses. IRS Publication 523 describes “unforeseen circumstances” in great detail.

As far as Capital Gain goes, as of 2003, there is a special provision provided to people enlisted in the army, navy, and National Guard that states that people in the military do not need to have lived in their home for two years. Additionally, the 5 years one has to have owned the property for has been extended to 10, which allows people to fulfill their military obligations.

Another way to avoid Capital Gains is for one to buy a “like-kind” property, i.e. a home of equal or greater value than the property that was sold, usually within 180 days of selling the previous home. This is called a 1031 Exchange. If one pursues this option, forms must be filed with the IRS to make them aware of the purchase and the property must be located within the continental US.

*Consulting an accountant on which, if any, of these exemptions you might apply for, is key.

Blog and site courtesy of George & Abigail Herrera, Realtors and Co-Owners of the Queens Home Team at Keller Williams Realty Landmark II.

George and Abigail Herrera_Queens Home Team at Keller Williams Realty 2_HEADSHOT_ROUNDBUY: www.exclusivequeenshomes.com | SELL: www.queenshomeselling.com

Original Article: http://blog.queenshomeselling.com/blog/queens-real-estate-taxes-guide/