Fixer upper home for great tax advantage!
The bipartisan Joint Committee on Taxation estimates that in fiscal 2022 alone, American homeowners would divvy up $ 66.5 billion worth of deductions for mortgage interest payments, $ 21 billion for local property tax write-offs, and will realize nearly $ 14 billion tax free on home sale profits. Fixer upper homes offer low-cost opportunity to invest in real estate.
How much profit in fixerupper homes?
Target $15,000 net profit (after all expense) for fixer upper properties under $100,000 and at least 20 percent profit on houses with a value over $100,000.
After you fix up the property you may sell it for immediate profit or lease it for continual revenue, equity build up, depreciation, and tax benefits.
Run-down, neglected, and bargain-priced fixer uppers leave more room for improvements and profits.
Fixer upper home buying criteria:
- Neighborhood: (1) Quality of properties (whether they are well-maintained or neglected), (2) year, model, and condition of cars parked in front of properties, and (3) schools, recreation, and sporting facilities, distance to shopping centers, and main roads
- Square footage of living (heated) area
- Number of bedrooms, bathrooms (three bedrooms with two baths being standard for family homes)
- Lot size
- Age and construction type (colonial, ranch, etc.) of property
- Income-producing capability
- Extra features (fireplace, finished basement, garage, or carport, decks, etc.)
- Utility expenses that also indicate energy efficiency of the property
Fixer Upper Homes: Quick Profit When You Sell, Continual Income When You Lease.
How much should you invest?
After you complete your review of the area, check prices of homes in the neighborhood.
Set your criteria, compare prices of similar fixer upper homes and determine your profit. Again, do not buy if you are not going to make $15,000 net profit. In areas such as California target much higher profit margins.
Find a reliable contractor or remodeler
Another add-value project is remodeling. Find reliable remodeler and concentrate on remodeling kitchen and bathrooms for higher profit. For major improvement it is a good idea to Find Quality Contractors and complete larger scale improvement.
Are you going to keep your fixer upper home for continual income or sell it for quick profit?
Take advantage of tax benefits and appreciation by keeping your fixer upper home. However, you may sell it to make more money for down payment for your next fixer upper purchase. If you are planning to get an equity line of credit, second mortgage, refinance, or sell it.