Friday, December 26, 2014

Thinking about tearing it down

DEAR HARRY: I'm now almost 58 years old. I'm worried and thinking about my retirement years. I don't plan on ever retiring completely. I'm trying not to be foolish with what I have. I don't squander money on gambling and frivolous things. I own an old single house that I have rented out since 1992. At this point, it needs a lot of work.

In the area, builders are buying old homes, tearing them down and putting modern homes on the land. I'm considering tearing my house down and getting a new one built. I have a friend who's a Realtor who will sell it for me at a reduced commission. I already have two quotes from builders who have done this for others.

I figure that I'll get about $500,000 for it. What's your take on this?

WHAT HARRY SAYS: I like the idea. You should get the guidance of a lawyer familiar with the permits needed and to review the deal you make with the builder. You will have lost your rental income once you start, and it would be a good idea to consider what you want to do with the sale proceeds. You might even want to rent the new building instead of selling it. If you choose to sell and invest in other real estate, remind your lawyer of the possibility of deferring the tax on your gain by using a Section 1031 transfer under the Internal Revenue Code.

 


Email Harry Gross at harrygrossDN@gmail.com, or write to him at Daily News, 801 Market St., Philadelphia, Pa. 19107. Harry urges all his readers to give blood. Contact the American Red Cross at 800-Red-Cross.

Harry Gross Daily News Personal Finance Columnist
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