All Forum Posts by: Mark Caragio

I am in the process of subdividing a lot and building 2 new homes.  It was brought to my attention that deconstruction could more than pay for itself with the tax deduction.  But this is $30k more expensive than demoing.  If I model this with tax software as a donation it does more than pay for it, but my builder just told me that for a spec home that I immediately sell after construction, the deconstruction benefit only changes the basis on the sale and won't be as beneficial as a donation deduction.

I do plan to have a CPA do the taxes for this project next year, but don't have a CPA now and don't have the time to find one before the project starts.

So, deconstruct or demolish?

Thanks for the replies.

I hadn't really considered the pain of taking on a client if I sell during construction.  I'll have to keep that in mind, and I'll discuss with the builder to get his input (he's done this numerous times both for himself and clients, like me, as a contractor).

As for the heat of the market, it really is in one of the most desirable areas of Silicon Valley, when you consider schools and commute (only 2 mi. from the new Apple campus and less than 20 minutes to just about anywhere in SV, and in the CUSD).  Just this week, two inferior properties came and went over the weekend, and this has happened numerous times in the last few months since I've been watching.  The one's I've been watching have also sold above the asking price in every instance.  And right now, there is only one comparable home for sale within a 2 mile radius (it just came on the market this week--I'll keep an eye it).

BTW, my desire to sell early is largely to mitigate the interest expense for the construction loan, which I expect to be about $100k over a 20 month expected building horizon.  I am also concerned about the risk of a slow down coming before the home is completed.

I am starting a project to subdivide a property I own--in the heart of Silicon Valley and in the CUSD--and plan to sell one of the two homes as soon as possible.  At what point should I list it?  I'd like to pay off the construction loan asap, so I was hoping to list it shortly after framing starts, sometime late this Spring.  I have been advised, however, to wait until it is complete.

And, along this line, is it advised to pay the 2.5% - 3% to a listing agent, with it being a brand new home and (assuming it remains) a hot real estate market.  Three much less impressive, nearby properties sold in less than a week for over asking, and currently there are only two other 4+ BR homes listed within a 2 mi. radius.

Finally, what should I offer the buyer's agent in the listing, if I FSBO it?