Have a co-worker that bought a house back in 2004 as his primary residence, and is selling his home. Talked to him the other day and he has an offer but not sure why some one would do it this way (he’s curious as to why, but really not concerned as long as he gets the money out of it), but anyways, here is what he explained to me:
My co-worker bought his house in 2004 for $155,000. He is selling it for $175,000, a buyer put up an all cash offer, (son is going to grad school up here, so have his son live in it while he goes to school. So I’m assuming he’s using it as a rental for his son and who ever else rents with his son). My co-worker is just shy of the 2 year owner occupied so he doesn’t get the $250,000 ($500,000 married) exclusion. The buyer waived his right to a new inspection after seeing my co-workers from 2 years ago when he bought the house. The buyer wants to close as soon as possible. The part that my co-worker doesn’t understand, and me also, as I am relatively new to REI, is that the buyer will write 2 checks: 1st for $155,000 for the house, and 2nd $20,000 (what my co-worker called chattel, I think that’s what he called it) for all the appliances/installed upgrades in the house (oil heater, septic, water heater, etc) in the house.
Why would an investor split the costs this way, how does this affect a persons taxes (both from the investors and sellers side), and how would a closing like this proceed (no realtor involved either), I have a theory but interested in some feed back.
Thanks everyone!