Help!
My ex and I just purchased a modular mobile home, double wide, on a cinderblock foundation and it sits on 3/4 of an acre. He's actually the one that purchased it. I tried to get him to get a mortgage, he says that he doesn't want one. He is paying for the house in full. 90,000.00. He's paying cash for it. A friend of mine said that if he does that he will be hit really hard by the tax man. Is this true. She said that buying a mobile home with cash outright instead of a regular house here in Tennessee, that he will get hit with lots of penalties. Is this true? She said basically if you buy a mobile home in the state of TN in full with cash, you get penalized by the IRS.
Like I said I tried to get him to get a mortgage but he says that he doesn't want one. Will we be hearing from the tax man on this issue? Or does he just pay the taxes when he purchases the house. We close on Dec. 13.
Thank you,
Lee Coleman, Sweetwater TN 
Keep in mind that if one would mortgage the property in question; you would pay around $216,000 for a 30 year mortgage at 7% APR.
If he can pay cash this would be much better than paying $216,000 for a $90,000 home
I suggest the following web page for help
http://www.irs.gov
Best of luck,
Jmichael
[ Edited by re4me on Date 11/27/2002 ]
re4me,
Tell you what, you invest $90K in a modular home that will have very little appreciation over time. In other words it is not an investment that will make the best use of those kind of funds.
I will take the $90K and do some creative real estate investing, make about 2 to 3 times that amount in one year. This way you keep your money working for you instead of you working for your money. If one feels so compelled pay off the modular home at this time.
It depends on how one perceives the value of money and what money invested wisely will return.
Two different views, as always up to the individual what they are comfortable with.
John $Cash$ Locke
John,
Your post on my comments, I fail to understand. Did not you read their question?
The question was to finance or pay in full do to tax issues.
It is better to pay in full then to finance a modular home as their is never a way to profit with this game.
I as well would never pay 90k for a modular home, but they have already and a lot of folks do. They did this for a home and not as an investment.
I my self buy modular homes and place them on lots and owner finance at retail. I would never finance (OPM) where there is no or very little appreciation.
If this site is into discrediting experience, just let me know so that I can avoid wasting my time.
I only joined to help people as I get paid $275.00 per hour to consult with folks.
I am very disappointed with your comment. This should have been sent in a private manner as you gave them no advise and were just flexing.
I DO NOT PLAY THIS GAME!
If this board allow this I AM OUT!!!!!!!!!!!
I am sorry to post this folks, but since John posted in this manner I must as well
Jmichael
wbinvestor@hotmail.com
i found the advice very good..it all depends on the individual as was stated. I didnt see where anyone's credentials were being discredited.
All advice recieved here greatly appeciated.
Happy Thanksgiving everyone .
re4me,
Here is what I read, if they finance then they can take the interest deduction from the loan off their taxes at the end of each year. If they pay cash then no interest deduction. I believe this is what was really meant by the tax situation.
You recommended they pay the unit off:
"If he can pay cash this would be much better than paying $216,000 for a $90,000 home"
I said I believe they could make more money investing the money in a different manner.
Then I said basically each individual should make their own decision.
Two different points of view, if I sent you a private e-mail then my point of view would have went un-noticied. Would this be fair to me or the poster asking the question?
I think you should understand it is never personal with me when I post it is only business. My business sense said I would do it a different way than you would.
You took my post personal, instead of in the light it was intended. I have posted many times and posters have disagreed with me, but I never attacked them for doing so, or threatend to take my marbles and go home.
John $Cash$ Locke
Ok Ok, lol. I thought both messages were great. No fighting please.
I just wanted to know. Because one, we wouldn't be able to invest. That is not what we are looking to do right now. I wanted him to put 50,000 down and finance 40,000. So this way we would have some money to live on while he found a job. Which he does not have and I am disabled. So I was looking out for my children and me so that we will have all the basics. He is only going to have 10,000 after he pays off the house and he did not figure in the taxes with that. That's just the offer of the house, 90,000. So I am figuring that most of that 10,000 is going to go for the taxes.
I will go check out that website and thanks to all who replied.
Leee
Depending upon where you live also, a mobile still requires payment of real estate taxes (Unless it gets classified as a 'vehicle' as in some states) based upon their inital appraised value.
Your taxes normly do not go down even though the value of your mobile does. In Southern California as an example, they don't depreciate. In fact, they appreciate because space is so scarce.
The less equity you have, the less ability you will have to borrow money against the value of the home, if at all. It is notoriously difficult to get equity or other type loans for mobiles in some area's.
IRS publication 530 is a good place to start
I suggest the following for mobile home loan searches http://mobilehome-loan.com/
A nice forum is http://mobilehome.com
I would suggest reading "Investing for Dummies,"" Home Buying for Dummies" and "Mortgages for Dummies, all published by Hungry Minds (formerly known as IDG Books).
I am in hope this info helps - Have a great day
Jmichael
Lifeizadream4u2,
When I first read your post I surmised that you were thinking that putting this amount of money out without having any reserves for living expenses, was not sitting well with you.
Your middle line approach may well be the answer, don't put all your eggs in one basket. Whenever a person makes a decision they need to anaylize the contingencies they may encounter good and bad. From your point of view securtity is very important to you and your childeren. I would hope that a happy medium can be reached in your situation.
John $Cash$ Locke
Thank you so very much for your responses. They were very supporting. I too am hoping to come to some kind of happy median, but I'm not sure it will.
I will check out those sites this weekend. And thank you very much for the info. I had no idea where to even look.
We'll happy thanksgiving. And I will let you know if there is anything else that I need.
Lee
A little more info,
I also agree with John, as their is a better return for the buck.
In my research of your area I find that more than 70 percent of the housing stock are single-family houses and 23 percent are mobile homes.
Almost 80 percent are owner-occupied; 12 percent are vacant. Average home value is less than half the national average.
The average home sale price is $101,235.88 with 3.27 acres.
In retrospect, if you folks could invest in a fixed single family resident a $90,000 home would be of greater value. For example it's value based upon the housing rate of return in your area would be worth at low-ball $114,000 plus. Your modular mobile home value would be worth around $65,00 more or less.
If you financed a $90,000 home with $45,000 down at 7% Apr your payment would be $404.47 for 15 years. I would personally finance this for you, as would most investors at TCI.
Take the $45,000 left less say $15,000 for other expenses leaving $30,000 and say invest in a low end rental that can produce a cash flow of $16,500 on the low end.
Your net worth would be over $125,000 without compounding
Try suggesting to take a look at real homes in your area at realtor.com for that price range.
John Michael
re4me,
Darn habit of mine seeing what people are feeling not necessarily what the words in their post say.
I think you will find you need to be a cross between an all around advisor and a creative real estate investor when posting for some posters.
Anyway enjoy your posts, remember if I disagree it is only because I think I am always right. I was wrong once but I feel I was mistaken about that.
Happy Thanksgiving John Micheal.
John $Cash$ Locke
Thanks for the response, I appreciated it. We checked the amount that we would have to pay for 15 years and it would be 265 and change a month, on a 40,000 mortgage. My realtor checked into it for me and that is what we were able to come up with at a 5% interest rate through a bank in my area. But my ex doesn't want to mortgage the house and is paying it off in full. I tried to explain to him today that it would be better for us to get a mortgage because the tax man would be knocking at our door, but he doesn't want to hear. He just sold his house in New Jersey so that he could buy this one down here in TN. When he's done paying what he owes on his mortgage up there which is 80,000 he will walk out with 100,000 and he's insisting on paying this house off in full. I just tell him you got to do things the hard way all the time.
Anyway, he'll find out. And then I can sit back while he scrammbles around looking for the money for us to live on. He says that he wants to go get a home equity loan once he purchases the house, but to me that makes no sense when he could get a mortgage for 40,000 at 5% instead of a home equity loan at 7%. We checked them both out.
Anyway, again thank you,
Lee
Dear Lifeizadream4u2
No big deal, he just needs to do what he is most comfortable with. You tried and that is all that counts.
Have a great day.
John Michael
Quote:
On 2002-11-28 17:20, JohnLocke wrote:
re4me,
Darn habit of mine seeing what people are feeling not necessarily what the words in their post say.
I think you will find you need to be a cross between an all around advisor and a creative real estate investor when posting for some posters. <IMG SRC="images/forum/smilies/icon_rolleyes.gif">
Anyway enjoy your posts, remember if I disagree it is only because I think I am always right. <IMG SRC="images/forum/smilies/icon_wink.gif"> I was wrong once but I feel I was mistaken about that.
Happy Thanksgiving John Micheal.
John $Cash$ Locke
John $Cash$ Locke
John $Cash$ Locke,
Thanks for the note LOL and a lot of LOL.
My wife tells me that I think I'm always right, I try to tell her that I am but she keeps reminding me about my dysfunctional always right knowledge.
John Michael
Your guys are to funny. And your right I did try and that is all that counts. Your advice and websites were very helpful. thanks again,
Lee
Hello Liz,
Now that all the little bits of information is out in the open, it is easier to pass on ideas. The money that he gets from the sale of the other house will be taxed at a greater rate by not purchasing another home within the allow time frame. The IRS will not hit him any harder by taking the action that he has selected. Yes, he would pay the same amount of property tax with or without a mortgage. So your concern about have money to live on is another issue.
Everybody is not into real estate investing, I think that I have done well for the short amount of time that I have been an investor. However, my wife does not want anything to do with the business. Lets say she wants to enjoy taste of the fruit, but not willing to go out and pick it.
Keep the peace and allow your ex to do what he feels best for his situation.
Your right, I did find that out today that because he is selling his house up north and putting it into another down here he's not going to get hit with a big tax thingy.
As for letting him do what he want's, that's what I'm doing. Thanks for all the advice everyone. I close on the house on Friday, of next week.
I do have a question though, one more, I promise.
He was supposed to put a 500 dollar good faith payment down on the house here and hasn't done so. Will this affect the sale of the home. Could the sellers say no beings that it's so close to the closing date?
He did agree to do this in the contract that he signed.
Thanks,
Lee
Quote:
On 2002-11-27 22:28, JohnLocke wrote:
re4me,
Here is what I read, if they finance then they can take the interest deduction from the loan off their taxes at the end of each year. If they pay cash then no interest deduction. I believe this is what was really meant by the tax situation.
You recommended they pay the unit off:
"If he can pay cash this would be much better than paying $216,000 for a $90,000 home"
I said I believe they could make more money investing the money in a different manner.
Then I said basically each individual should make their own decision.
Two different points of view, if I sent you a private e-mail then my point of view would have went un-noticied. Would this be fair to me or the poster asking the question?
I think you should understand it is never personal with me when I post it is only business. My business sense said I would do it a different way than you would.
You took my post personal, instead of in the light it was intended. I have posted many times and posters have disagreed with me, but I never attacked them for doing so, or threatend to take my marbles and go home.
John $Cash$ Locke
I am not a John Locke groupe but I have to hand it to you.
John you really do have class. I think I can learn a thing or two from you about biting my tonge when someone posts ridiculous comments.
Keep up the good work John.
Quote:
On 2002-11-27 20:39, JohnMichael wrote:
John,
Your post on my comments, I fail to understand. Did not you read their question?
I only joined to help people as I get paid $275.00 per hour to consult with folks.
I am very disappointed with your comment. This should have been sent in a private manner as you gave them no advise and were just flexing.
I DO NOT PLAY THIS GAME!
If this board allow this I AM OUT!!!!!!!!!!!
I am sorry to post this folks, but since John posted in this manner I must as well
Jmichael
**Please See My Profile**
People give you $275 an hour to tell them not to use their cash to get loans on investment property where they can make more than 7.5% return. And instead would advise this woman's boyfreind/husband to pay 95K in CASH for their house????
WOW PT Barnum was right.[ Edited by MrMike on Date 11/29/2003 ]
I forgot, who was flexing??? Z
That's enough boys. You WILL be nice to each other on this board.
Shawn(OH)