A Home's Tax Valuation Differs from Its Market Value

Daily Herald (Arlington Heights, IL), June 4, 2016 | Go to article overview

A Home's Tax Valuation Differs from Its Market Value


Q. We are getting ready to sell our house. We bought it in 1967. Our tax bill says it's worth $260,000. Is that how much we should ask for it? Should we hire an appraiser? What if our Realtor advises us to sell the house for some other amount?

A. You shouldn't use your tax-assessment figure as your asking price, and you don't need a professional appraiser at this point.

Local real estate brokers will analyze recent nearby sale prices ("comparables") and consider how those properties compare to yours. It's prudent to interview more than one agent before you list your home. Each agent will suggest an asking price.

Right now, those are the most reliable estimates of market value.

Q. I am going to sign a quickclaim deed. I need to know what my expenses will be and how it will affect my income tax return?

A. A deed transfers the signer's ownership of real estate to someone else. States have various kinds of deeds. A full-warranty deed, for example, includes a guarantee that the signer owns the property free of competing claims.

A quitclaim deed is simpler, which is why some refer to it as a "quick" claim. It just transfers (quits) any ownership the signer has to someone else. Quitclaims are often used in family transfers and divorces.

Your expenses will depend on the type of transaction. If this is a gift transfer there will be minimal fees to cover drawing up the document and entering it in the county's public records. A gift-tax entry on your tax return may be necessary, but there probably wouldn't be any actual federal tax due. State gift-tax laws vary.

If you are transferring the property to charity, income-tax deductions should be available.

If, on the other hand, you are selling the property, a transfer tax is included as a closing expense in most states. Any profit or loss from the sale would be reported on your income tax return in normal fashion. If the property is your own longtime home, you might be eligible for a home-sale income-tax exclusion.

So, as the lawyers say: It all depends.

Q. I am an attorney, and I must say your concern about timeshares having different resale values across the country is unnecessary. The reality is that 99 percent of timeshare owners have a zero percent chance of selling their timeshare. …

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