SHOULD YOU BUY A HOUSE THAT NEEDS RENOVATION?
The home-improvement shows you see on TV make it look so easy. Buy a fixer- upper of a house with "good bones," and presto change-o, turn it into your dream home.
The reality, however, is that buying a fixer-upper is some serious work. One option is to hire someone to do the work, which is the way to go if you do not have the right experience for the job. However, it can be expensive, because you have to pay for labor. In addition, you cannot just check out and let the pro handle everything, because there may be a number of mistakes and miscommunications during a renovation.
Another option is to do the work yourself. You can save money on the labor, but the work will take significantly longer than a professional will. Too many homeowners think they are the DIY kings and up trying to tackle projects that are too much for them to handle. It is wise to take on a small home improvement project yourself, but leave major renovations to the professionals.
A renovation is even more profitable for homeowners, thanks to Internal Revenue Code 121. The code states that if you own and occupy the house for two of the five years before you sell it, up to $250,000 of your profit is tax-free. A married couple filing jointly can claim up to $500,000 tax-free profits.
Renovations can be a challenge, but also very rewarding. The most important thing is to be sure, of what you are getting into. Double-check your budget and estimates with professionals, and have comprehensive inspections done on the property before you purchase the property.
Leave A Comment