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possible condo purchase? Advice requested...

June 15th, 2008 at 08:09 am

I think I am in the process of buying a condo. I really don’t want a yard to deal with and this condo seems like a good deal. 2 bed/2 bathrooms (separated by the entire condo, almost like two master suites!) 1230 square feet. Now I really want one on the bottom floor because I have bad ankles and I fear the day I break one again (don’t ask how many times!)

Listed price brand new $239,990 as it dropped $70,000 last week because they want to close them out. Third largest floor plan in the complex and attached two car garage with lots of room and storage.

Now, they are offering an additional 10k drop in price if I have 3% (no problem) plus another 10k toward monthly fees (about 250/month), hopefully toward closing costs or something else I can’t remember right now.

Monthly payment around $1390 plus $250 HOA fees plus $250 property taxes plus $69 for insuring all contents and everything from the walls in for the condo. Lots of feature to save energy. One good thing, it faces the sun most of the day, great for winter, harder to keep cool in summer without good window coverings.

This is the model so that means that lots of people have wandered through and I know they will clean the carpets, but is it ok to ask for new carpets or hard wood floors? Complete cleaning of the entire condo (I mean good deep cleaning)? Throw in a washer/dryer and refrigerator? Or at least credits back to get them?

How do I adjust my withholding to reflect the property taxes and mortgage interest I am paying? (I am currently withholding at 0 on 60K a year because I like getting back money at the end of the year.) To keep them at zero I’d have to drop my 401k ad 457 plan deductions for a while (four months only). But how do I know where to push the withholding to, 2? 3? 4? (Mortgage interest will be about 1200 a month for the first couple of years and I have no real write offs other than that.)

I will be advertising for a house mate and since it is bottom floor, two car garage I’d allow someone to park in the garage or use part of it for storage for an extra house fee. Rooms for rent in this town go for about $500/month plus I would ask for half of utilities.
What do you think? Any accountants out there can give advice about buying a home and withholding questions?

5 Responses to “possible condo purchase? Advice requested...”

  1. gamecock43 Says:
    1213538666

    I love the models. They have all the upgrades so you are starting out with the best condo in your complex. But I have no advice for you. Though this is exciting and congrats!

  2. monkeymama Says:
    1213540628

    Since I live in your area, I honestly do not think it is a good deal.

    I also read an article the other day about how condos were really struggling in high foreclosure areas, because they were not collecting enough assessments (too many empty units).

    I would also be wary to buy a new place that was not sold out. We have condos on our corner that have an insane vacancy rate. A few renters and most are bank owned. So do your research. You do not want to buy in a place that is sitting half empty.

    I have some pretty serious concerns why you would want to jump in right now.

    Just being very honest.

    The condo market is also terrible around here. But I totally understand you not wanting a yard. We want to eventually downsize to a condo and I understand you can't put a price on that. But that is one purchase I would wait to bottom out a bit more.

    As to answer your questions though, I think you will have a good 4 or 5 withholdings. You will get a HUGE tax break with that purchase.

    Add up your interest expense for the year, and property taxes, and divide by $3500 (just an estimate of what personal exemptions are for 2008 - it's around $3500). That will be your number of withholdings. Add one for your personal exemption.

    For each withholding you take, I'd assume $40 back monthly. Doing major rounding and assumptions here, but to give you an idea. You can easily up your net check by $200/month.

    I also think this will bump you quite clearly into the 15% tax bracket, if you are not there yet. Between that and your 401k I doubt you would pay much of any taxes. Though I am trying to keep in mind you are single. I don't have the single tax rates in front of me. They always shock me (you get taxed so much more than us married folk).

    As far the sellers, they are most likely desperate. Take what you can get! Wink
    Whatever you decide, good luck!

  3. monkeymama Says:
    1213540743

    P.S. Oh, if you take on a renter that will be income, so it sounds like you might not have as many withholdings after all. NEt out that income when figuring your withholdings.

    Try the IRS withholding calculator - it is good.

    You'd want to see a tax preparer in year 1. You can get some deductions, but the whole renting out half the place gets complicated quick. You'll want the deductions to offset the income, and you will want it done right.

    As far as the above, it is simply my opinion. I just want you to think carefully. This could be the bottom and I could be wrong. Just tread carefully.

  4. Ima saver Says:
    1213540856

    I would be wary also. We bought a condo once and the water kept getting turned off cause no one was paying their monthly fee.

  5. anonymouse Says:
    1213542379

    A couple of my friends got hit with some serious surcharges from their condo HOA. The roof had to be replaced and they had to come up with $5000 or be kicked out of their condo. The same happened to the other friend when their HOA wanted to replace windows. If there isn't enough people to pay the necessary HOA fees then you are stuck making up the difference.

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