New buyer... Location & HOA Questions

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buylowsellhigh_IHB

New member
<p>Hi... First time poster on the forum. Been living (renting) in irvine for several years now. After looking thru the posts here, I've gained a new insight on different neighborhoods and homeownership.</p>

<p>I'm in my mid 20s, unmarried, and looking for a relatively new neighborhood (3br). My price range (650k) based on my criteria doesn't really allow for detatched homes... HOA's are fine as long as they dont cost more than $250 (including some insurance). So far, I've narrowed it down to Oak Creek and Quail Hill. But I'm also open to Northpark/Columbus but i've heard horror stories about Northpark HOA... and Columbus seems to have the highest HOA+Special assessments of the bunch. </p>

<p>In general, I'm tolerant (and appreciative) of HOA's as long as the people who run the associations don't have the 'napoleon complex.' I've heard enough horror stories from my friends (and had a few run-ins as a renter) that a problematic HOA ranks high on my list. Not saying that I break rules, but having rental vans towed on move in day (Quail Hill) just isnt my cup of tea... </p>

<p>So, I'm ready to take a dive, before the dive ;). But seriously, a main reason for my purchase is to take advantage of the mortgage tax deduction as well as the 27.5 yr depreciation. I'm a business owner and I've reached the point where I'm out of tax deductions. It will really help for my tax situation. I've always lived with roommates because my mentality is that I pay $30 a night (900/mo) for a place to sleep, given my 12+ hr work days.</p>

<p>Can someone offer some insight about these neighborhoods?</p>
 
For a general overview of the various villages in Irvine check out the tag <a href="http://www.irvinehousingblog.com/tag/community-profile">Community Profile</a>.
 
<p>buylow,</p>

<p>You can buy a 3-bedroom detach home in the neighborhood of West Irvine (zip 92602). The HOA is roughly $139. HOA includes Pool, Spa, Tennis, Parks, Trails,.....</p>

<p>Example: MLS #P569519, Detached courtyard home, built in 2002, for $639,000 asking. The neighborhood is only a few blocks from Irvine Market Place.</p>

<p>HOA board changes yearly and you can be a board member. It is more important to look at the HOA financial statements. Rules and regulations can be changed through votes.</p>
 
Hello buylowsellhigh,





First, I'd like to congratulate you on being in a position to purchase a 650k home at young age of mid-20's. I didn't buy my first property until I was 28, and could only afford 140k-180k condos back then!





I own properties in Oak Creek HOA and have never had any problems with them. To date I've not encountered any HOA board or board members with Napoleon complex. The monthly HOA fees is roughly $180 and the neighborhood is pretty nice with plenty of parking. The only down-side is that being a newer neighborhood, you have less green space.





There are some single-family homes off Jamboree about 1 block away from Tustin Marketplace with very low ($50) HOA fees, but they don't have swimming pool.
 
Re the tax advantage of the "27.5 yr depreciation," unlike investment property, I don't think you're allowed to depreciate your primary residence.
 
Marty, I was thinking the same thing. Wouldn't it have to be bought as an "investment property" to depreciate it? If so, he would then have to claim the roomies "rent" as income...which kind of cancels out the tax write off. I think.
 
Trooper, yes, I think so, and even then the depreciation would only offset income associated with the investment property, i.e., it would not entitle you to tax savings on your ordinary wage income. Otherwise people would be incentivized to borrow money, invest in real estate, and use the depreciation to offset their wage income, which is what doctors and lawyers and other traditional high earners were doing until the passive activity loss rules were put into place in 1986.
 
marty - You are 99% correct. A taxpayer may not depreciate any portion of his personal proeperty in which they reside. They may depreciate any improvements of real property for which they collect rent. You may still use depreciation as an expense against rental income and any realized loss, including the depreciation may be used to offset normal income up to the treshhold AGI amount, (sorry, I don't know the amount). Unless you are a re professional, and then there is no passive activity threshhold. For taxpayer with passive activity loss whose income is above the threshold limits, the loss with carry forward until they make less then the threshold amount or they sell the property, at which time, the loss is subtracted from normal income.
 
<p>Thanks for your kind comments. The community profile page is useful for the neighborhoods I havent lived in, but the hard part is finding special assessments... HOA is fairly easy to find via the MLS. Plus, I was also looking at some of the more shall i say, 'liberal' statements of HOA neighborhoods. I'm not interested in active participation. I'm very busy with my business so i dont have time to deal with community politics, politics aint my thing. For example - My neighbor was mad at my washing machine being on at night. I leave for work at 10am everyday and come home after midnight. He sent the cops over and IPD ended up telling the neighbor not to call them about appliances being on at night. This is something that I do not need HOA's to bother me with. And I have a feeling that, some HOA's might..........</p>

<p>The tax benefit of the home is easy - If the home has 3 rooms, my rent for 2 rooms will mean that 66% is rental property and 33% is my own personal residence. As long as it is PROPERLY DOCUMENTED then it will not be a problem dealing with the IRS. The depreciation gets recaptured at sale, but you dont have to pay back as much as you save. Plus, the "borrowed" money is interest free. Come audit time, its a box of everything that they can look thru at their own time. Otherwise, I can also place the home under a relative's name and all of a sudden it becomes rental property. Bottom line is, the tax code has a lot of loopholes that favor real estate. But be forewarned, using their loopholes may be a reason for THEM to look for your loopholes (mistakes).</p>
 
That actually looks like a pretty nice place nirvinerealtor. I don't think I will be buying around here for awhile though as I still feel there is a long fall down from here. If you need help on getting a mortgage buylowsellhigh shoot me a pm since I live with 2 mortgage brokers and I can offer fairly unqualified advice on what to look for in that regard. As nirvinerealtor mentioned look carefully at the finances of the HOA...a high HOA fee and/or lots of special assessments may not necessarily be bad if they are genuinely spending the money on landscaping and keeping the property up it will retain value better.





So your planning to declare rental income on your mortgage app and tax return and then use mortgage interest as an offset for tax purposes?





Congrats on being close to home ownership.
 
<p>My mortgage app is already approved... just searchin around for a home now. What do you think a detatched condo in oak creek should cost, per sqft? I found one in oak creek:</p>

<p>MLS # S489402. Two weeks ago it was $715k, now its $699.</p>

<p>So... experts... what do you think I can get this one down to? </p>
 
Irvinerealtor, 59 ARBOR GLN isn't west irvine, its on corner of irvine center dr and culver... but its a good deal for that particular area... think redfin miscategorized this?
 
<p>OK. Shot out an offer today in the amount of the current owner's 2005 buying price. Some people say impossible, other people say i'm offering too much. What am I saying? "Thanks IHB" :)</p>
 
<p>buylowsellhigh - I say it is worth what you or the next person is willing to pay for it. There is no too much or too little. There is only what someone is willing to pay and what someone is willing to accept.</p>

<p>But, if you look at your previous post where you describe the price as falling from $715 to $699 in the space of the last couple weeks, would it then seem prudent to wait for awhile longer before you buy and see if you cn buy for less later?</p>
 
<p>The time to buy now is relatively more expensive than Winter time. During the Holidays when there are much less buyers out there and you have much more negotiating power. </p>

<p>Your amount could get you a detached condo. Do not buy any attach product. I have several friends that are currently dealing with mold issues caused by neighbors' leaky drains. Check out my post on mold.</p>

<p>You should wait for Sienna a detached condo project in Woodbury East. It is relatively closed to the freeway like Oakcreek. I heard it will be the next clever generation of the detached condo. </p>

<p>There is an advantage in buying the first phase and the very first concept of a plan because the builder must keep the price low so the subsequent re-uses have room to grow.</p>
 
<p>buylow,</p>

<p>59 Glen Abor is in West Irvine. So 59 Abor Glen is not.</p>

<p>MLS # S489402 is price ranged at $699K - $715K. We discussed before, Redfin displays the lower number. I looked at comps for this home, price peaked in 2006 at roughly $700K top. You figure a possible 10% drop from peak.</p>

<p>I am sure you are working with a real estate agents. And I am sure your agent is providing you a detailed comprehensive (factoring in the condition and location) market analysis for your particular house of interest. </p>

<p>Good luck with your purchase. </p>
 
<p>Buylow,</p>

<p>Have you looked at Westpark ? I currently rent a 3/2 single family house there, it's a very nice area, with good locationI think HOA is about $220. A similar house to the one I rent and in the same street sold for $650K about 4 month ago. I am looking at buying there eventually, but definitly not now ( my rent is less than half the house payments I would have to make, with very low probability of price appretiation in the next 2-3 years). </p>

<p>As for the tax benefit, I got around that by having my company sign the lease and make the rent payments and classify it as "guest house" . I am not sure if this is an option for you. Good luck.</p>
 
bkshopr,





Do you have any more details regarding Sienna? I am definitely very interested in that project and I'm surprised the floor plans haven't been released it.
 
<p>Awgee - you are right... housing for the most part isn't really considered a commodity, but then when its a buyers market, we've got a lot to choose from :)</p>

<p>bkshopr- I'm leaning towards the detatched condos because its a good middle ground between attached and sfr's. I dont need much space, but i dont like being claustrophic.</p>

<p>Irvinerealtor- I appreciate your insight and recommendations even though I've got someone that i'm working with. I went to WI this weekend but wasnt too impressed with what I saw. I think I'll stay in regular irvine. I've expanded my search to include Westpark now. </p>

<p>Mo- If the IRS didn't offer a writeoff for the mortgage and/or the 27.5 yr depreciation, it'd be a pretty crappy time to buy. By using mortgage as tax deduction, we can basically take 70% off the top of a home payment and that'd be the net cost after tax savings. Your "guest house" is workable and is a legitimate tax deduction (for the company). But my accountant was recently audited and they were very aggressive in calculating cost of living. The IRS can strongarm anyone reclassify things (usually without a fight) especially if the taxpayer doesnt have the resource to fight them in court. For example, I can lease a company car, rent a company house, have company dinners 30 days a month, and pay myself $500 before tax. But I'll be fined :) Not telling you of an imminent danger, but the possibility is always there. For me, it'd be more conservative to classify either as primary residence (and take the mortgage write off) or buy as an "investor" and rent (the portion of the home) from myself. That way income and expense would be more evenly apportioned. Plus, I'd then be able to take the 27.5yr write off as well :)</p>
 
<p><em>By using mortgage as tax deduction, we can basically take 70% off the top of a home payment and that'd be the net cost after tax savings.</em></p>

<p>I would check my figures on this before I made any decisions. 70% off the top?</p>
 
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