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Ways To Get Maximum Profit Buying Tax Lien Properties
If you are a married couple purchasing a house together, either outright or through tax liens, you will usually be joint tenants. This indicates that you both get the whole of the property and if one dies the other inevitably inherits.
But if you are a cohabiting pair, you would be sensible to prefer the tenants in common option, whereby you each own half the tax lien or property. Where this occurs, it is vital for each partner to make a will expressing that, on death, the deceased's half of the property goes to the remaining partner. Or else, it just goes into the estate. Inheritance tax does follow, however, as the only exception is for married couples leaving property to each other, or same-sex couples who have claimed a civil partnership.
I bought three properties jointly with my spouse, who died unexpectedly in 2004. Because we had each drawn up a will particularly stating that the survivor would own the houses, I likely 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 important indeed when buying property and tax lien certificates and should not be left to chance.
There are other vital issues when you are investing in property with somebody else, such as: Does one person have possession and if so, what rights does the other person have?
Who pays the loan and how will this affect the equity on resale? What occurs when one party needs to sell and the other does not? What happens in the event of death? How are expenses to be distributed? What about life insurance? What happens if there is negative equity? Who pays for maintenance?
Before you ever start investing with a second person, whether this is your spouse, partner or friend, it is essential to draw up a legally binding documents. If you are a close friend or intimate partner, it can sound harsh and calculating to do this, but it is essential.
If my late partner and myself had not prepared a Deed of Covenant and each one amended our wills, there would have been a confusing 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 decided that the best and most secure way to invest in property is to utilize your own home, you must be very careful that you are not seen to be running any sort of property development business for gain, as HM Revenue and Customs will take quite dim view if you are, and tax you accordingly.
The main steps of using your own home as an investment are:
Buying a place in an up-and-coming area, living in it for some years, then selling it on at, you hope, a huge profit;
Buying a wreck, doing it up and then selling it on, whenever living in the place in the meantime;
Developing your own home from scratch, staying 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 when you are not there yourself;
Buying a location that has a self-contained apartment in the basement or in the loft, or converting part of your home into a self-contained flat;
Letting out your property to TV and film crews;
Having a small hotel or B&B as well as living in the place yourself.
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