Ways To Get Maximum Profit Investing In Tax Lien Properties
If you are a married couple purchasing a house together, either outright or through tax liens, you will usually be combined tenants. This indicates that you both own the whole of the property and if one expires the survivor inevitably inherits.
But if you are a cohabiting couple, you would be sensible to decide on the tenants in common option, whereby you each carry half the tax lien or property. Where this occurs, it is vital for each partner to make a will stating that, on death, the deceased's half of the property goes to the survivor. Otherwise, it just goes into the estate. Inheritance tax does follow, however, as the only exemption is for married couples leaving property to each other, or same-sex couples who have claimed a civil partnership.
I bought three houses jointly with my spouse, who died suddenly in 2004. Because we had each made a will particularly stating that the survivor would own the houses, I automatically inherited them on his death. Alternatively I would have had to sell them to manage the estate. The question of joint or common ownership is very crucial indeed when buying property and tax lien certificates and cannot be left to chance.
There are other important issues when you are investing in property with someone else, such as: Does one person have ownership and if so, what rights does the other person have?
Who pays the loan and how will this affect the equity on re-sale? What occurs when one party wishes to sell and the other does not? What comes up in the event of death? How are outgoings to be split up? What about life insurance? What if there is negative equity? Who pays for maintenance?
Before you ever start investing with a different person, whether this is your spouse, partner or friend, it is crucial to draw up a legally binding documents. If you are a close friend or intimate partner, it can seem harsh and calculating to do this, but it is helpful.
If my late partner and myself had not drawn up a Deed of Covenant and each one amended our wills, there would have been a fearful muddle on his death. It is also essential to draw up these documents during splitting up, or the friendship coming to an end.
If you have determined that the best and most secure way to invest in property is to use your own home, you must be very wise that you are not seen to be running any sort of property development business for gain, as HM Revenue and Customs will take a very dim view if you are, and tax you accordingly.
The main ways of using your own home as an investment are:
Buying a place in an up-and-coming region, living in it for some years, then selling it on at, you hope, a vast profit;
Purchasing a wreck, doing it up and then selling it on, while living in the place in the meantime;
Developing your own home from scratch, living in it and then selling it on when finished;
Having lodgers or paying guests;
To rent out your home to overseas visitors as a holiday let as you are not there yourself;
Buying a location that has a self-contained flat in the basement or in the loft, or upgrading part of your home into a self-contained flat;
Letting out your home to TV and film crews;
Having a small hotel or B&B at the same time as living in the place yourself.
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