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Information on Real
Property
Whenever you gather
information on real property, think about the following information:
Property Description
This will be in one
of two forms.
 | If
it's in some kind of subdivision or organized residential development,
it will say something like "Lot so-and-so of the Lee Borden survey of Splitup
Acres, recorded at Book so-and-so, Page so-and-so." This is by far the
most common form of description for most homes. |
| If
it's not, it will actually describe the property using what lawyers and
surveyors call "metes and bounds." This is an actual description of a walk
around the borders of your property. It will say something like "Commence
at the SW (that means Southwest) corner of the NW corner of Section 37,
and travel 250 feet to a point of beginning. Then turn 90 degrees" - well,
you get the idea. When all of the turning and measuring is finished, it
should be back at the same corner where it started. |
The property
description should be easy to get. If you have a copy of your deed, that's
the easiest way. If you don't, you can get it some other way:
| Title
insurance policy on your home, if you have one. |
| The
tax assessor in your county or parish will have the record, and you can
pull it up that way. |
| Call
the lawyer who handled the closing. |
| Call
the real estate agent who worked with you to buy the house. |
Fair Market Value
The Fair Market Value
of any asset (and real property is an asset) is the price that would be
paid by a willing seller who doesn't have to sell and a willing buyer who
doesn't have to buy, assuming both the seller and the buyer have reasonable
knowledge of the relevant information about the asset. There are several
ways to estimate the Fair Market Value of real estate.
| You
can order an appraisal, but that
costs money. |
| You
can find out what other properties around you are selling for, and estimate
the value from that. No cost, but lots of time and trouble. And do you
know how others will perceive the differences between your property and
other houses nearby? I know I sure don't. |
| You
can ask a real estate agent to do a comparable search for you and estimate
the value. This is also free, and I think you can get a really accurate
value this way. Just make sure the agent who does the estimate for you
sells lots of property in your area. And I think the more successful the
better. The more successful agents, the busy agents, are less likely to
give you an overstated value as a way of enticing you to list it with them.
They'll want to set a realistic value at which they know they can sell
your property reasonably quickly, get their commission, and go on to the
next sale. |
I could devote
this entire web site to finding out the Fair Market Value of real estate.
It's that complicated. But let's not. Why not just go straight to the Real
Property Information Center, which has already done that, more or less?
What You Paid
For It
For most homeowners,
this no longer matters. That's because you can now exclude up to $250,000
of gain on the sale of home that's been your residence for any two of the
last five years, $500,000 for the two of you together if you're still married.
It still matters for real property other than your principal residence,
however, and it also matters for your home if you still own it but haven't
lived there in a while.
Most people usually
have an idea what they paid for the house. If you
don't, you'll probably need some cooperation from your spouse. If you don't
get it, print The Discovery Money Pit
and give it to them. Ask them if that's what they really want you to have
to do.
Any Improvements
Uncle Sam treats money
you've invested in improvements to real property as if you paid that much
more for the property when you bought it. We're looking here for major
improvements, things like an addition, an upgraded climate control system,
or moving walls around. New carpet, patching up the parking lot, and replanting
the dead bushes out front don't count.
Any Depreciation
Depreciation is the
technical term for an assumption Uncle Sam allows us to make that our use
of property wears it out over time and makes it less valuable. Depreciation
isn't an issue for most of us. Here are the times when it matters:
|
