·        DISCLOSURE

 

Don't hide problems or flaws in your house or they could come back to haunt you.  Tell your agent all about the property - both good and bad. 

 

The law says you must disclose everything you know (ALL MATERIAL FACTS), about the property and the buyer then purchases it knowingly.  You will have to complete a "Transfer Disclosure Statement" for the buyer.

 

In California there are many disclosure and advisory forms to fill out, all for the protection of our clients and agents.  An example of just a few are;

 

  • Transfer Disclosure Statement
  • Agency Disclosure
  • Statewide Buyer's and Seller's Advisory
  • Seer 13
  • Buyer's Inspection Advisory
  • Environmental Hazards
  • Mold Advisory
  • Pet Disclosure
  • Data Base Disclosure
  • Lead Base Paint (Home prior to 1978)
  • ABS Disclosure (Home prior to 1989)
  • Seller's Loss History (Insurance claims)
  • Water Heater Disclosure
  • Smoke Detector Disclosure
  • PLUS MORE!

  

·        LEGAL AND INCOME TAX CONSEQUENCES

 

The sale of any real property can have serious legal and income tax consequences.  The 1997 Tax Act provides that for a principal residence sold after May 6, 1997 a taxpayer can exclude gain up to $250,000 if you are single or married filing a separate tax return and up to $500,000 for couples filing a joint return. 

 

To qualify for this exclusion you must have owned your residence for at least two of the last five years before the sale.  You must have also occupied the house as your principal residence for two out of the last five years.  These two year periods do not have to be the most recent two years nor do they have to be consecutive.

 

It may also be possible to defer the gain on the sale of investment property under Internal Revenue Code Section 1031.  To obtain any of these benefits you must usually plan well in advance of the sale of your property.

 

You should contact an appropriate tax, accounting, legal or real estate professional for the exact effect on your specific situation.  Realtors® are not allowed to give legal advice.  Contact your own attorney or tax professional.