LongIrvine said:
was going in a different direction, as you've chosen to not include a lot of costs in your EW calcs. . .and reasonably speaking, it closed in oct of 2015, so more like 2.5 years vs 4. . . and assuming both properties owner occupied, would have advantage of being eligible for tax free capital gains treatment. . . .
fair enough. you are correct. Let's do some math with the EW piedmont home. The home was built sometime last year in 2017, so he's only paid 1 year's worth of taxes up to 6-30-2018. (Let's assume he can sell it by the end of the month and incur no more property taxes). But he's going to get hit on capitalized taxes. But that's not our problem, that's a seller's discretion for selling early. We're just talking ROI in the least amount of time. BTW, I don't know what his original purchase price is, I assume it was $1.201M based on last year's tax assessment bill so it should be fairly close.
Home built - 2017
Asking price: $1,498,000
Property Taxes paid: $11,385.31
HOA @ 12 mos: $1500
Landscaping (approx): $20,000
Seller/buyer closing costs (6%): $89,880
------
Total: $122,765.31
Home price paid ~approx in 2017: $1,201,686 + $122,765 = $1,324,451.
$1,498,888 - $1,324,451 = $174,437 net profit or 14.5% ROI. (The ROI is calculated only against the original purchase price of home)
But you're right he will be tax penalized for selling early. However, the point is to show, it took EW home 1 year to hit 14.5% ROI but takes 2.5 years for the 2015 GP home to hit 10.9% ROI.
Keep in mind, for every year that passes, the GP home has to absorb the additional $6,615 in property tax difference ($18K for the GP home vs. $11K for the EW home) due to the extra MR. After 30 years, the MR is gone for EW but remains for GP.
