A certain OS I am acquainted with, who is due to transfer in 09', closed on a house a few weeks ago. I do not believe it was a very well thought out purchase. Nor does it seem to have much possibility of a profit. Now I could be way off base on this, but assuming this hypothetical situation is true. Please just humor me and run the scenario through.

If I didn’t know any better I would think that this is intended to keep this individual in the area past their expected transfer date. This OS has already made it very clear that they want to stay in the area at any cost. So my curiosity is getting the better of me and I figured I would stir the pot a little.

-Doesn't the alcoast only apply to this year? (I am guessing they are banking on it being extended until next year)

-Could you list your home for say 10% over its value so it will not sell but is "for sale" to qualify?

-Does the capitol gains tax on a home qualify someone for financial hardship exemptions?

I'm sure there are more ways this can be flipped, but I would like to see what others think first.

-Me-

This message has been edited. Last edited by: KryptoKid,

Looks like your stirring the pot.

quote:

I'm sure there are more ways this can be flipped, but I would like to see what others think first.

Since I have always been vehemently opposed to "homesteading" I hope he gets orders to the Healy.

I can sum this up in four words - "Needs of the Service"

Does this OS have a family? If so, have you talked to his wife to see if he is going to geo-bachelor?

My advice would be to just mind your own business. If it's not hurting you, why bring someone else's dirt to a public forum.

OS1 Ski

quote:

My advice would be to just mind your own business. If it's not hurting you, why bring someone else's dirt to a public forum.

Very sound advice too.

Yes this person has a family so geo bachelor is always an option. Also renting would seem to be a viable option as well. There are still plenty of options for this person and they will be able to take care of themselves.

Im not trying to air someone elses laundry. Hence why no name, rank, location or sex is being used. I am more referencing the situation and trying to get others opinions on how a situation like this would and or can be handled with the current housing market causing standard policy to waiver. I am also curious how the CG intends to screen for this type of "homesteading" with this new alcoast exemptions in place.

-Me-

It's a roll of the dice. I bought a condo in the DC area in Oct '05. I had a little under four years left on my tour, and the real estate market was still going strong.

Almost three years later the market has crashed and I'm transferring a year earlier than planned. No way I can sell, so I'm forced to rent it out.

Not the best situation, but I'm not complaining. As somebody has already mentioned, "needs of the service."

Bottom line, if a member can't afford to pay the mortgage on the chance he/she might get transferred, they shouldn't buy.

You realize that another party has to trade orders with the homeowner? If it was as easy as not being able to sell your home, we'd all be in the clear. You're simplifying the situation. The market sucks right now for sellers but not for buyers, so even if they just break even, living in their own home is better than handing bah over to privatized "landlords" or living on the economy. There is zero risk with either AND zero chance for profit. Their purchase may not be as sly as you seem to think it is.

I was in a similar situation several years ago. I bought a house expecting to (and having orders to) stay in the area for 3 more years. However an RDC of one of the west coast 378s fell out due to some very weird circumstances and I had to leave having lived in my house for less than one year. Top that off it went on the market Sept 10'th 2001. It took the house 5 months to sell (nothing was moving at the time) but it ended OK...we broke even.

Even my above story aside I wouldn't discourage anyone from home ownership. It's not like a stock or mututal fund with an ultimate goal of increasing in vuale so much % per year. It's much more like a savings account.

What I would discourage people from doing is buying more house than they can afford. Thank goodness these crazy financial sub-prime/intrest only/adjustible rate mortgage tools are going the way of the dinosaur.

There are also significant financial incentives to owning vs. renting as well. You can reduce tax burden by around 20%, Increase credit score, and actually build equity for the price you would be tossing out a rent check for. Over a 3-4 year tour that adds up. I'm no tax specialist, but I believe the profits from sale aren't taxable if they are put into another home within 5 years.

Down side you have to cut your own grass and fix your own plumbing.

Military folks have a long history of owning homes in the communities they serve, we are citizen soldiers/sailors after all.

Back to the point of the post...If someone is trying to "game" the system by saying "I own a house so you can't transfer me" they may be able to make the case and they may not. There are a lot of legitimate cases where the institution can give some temporary relief. I've been around this system for a lot of years now and IMHO it calls BS for what it is.

ISCS B

I'll go back to my board now before MC R comes at me with a cattle prod.

A couple of things;

No, it is unlikely thar capital gains tax would have anyting to do with financial hardship as the member would have to have ~half million bucks PROFIT before paying a dime in capital gains tax in the situation you described. That would be possibly reduced by the fraction of 24 months ownership/occupancy rule, if and only if the military exception rules did not apply.

Secondly, the program mentioned requires a HIGH level of support by the CMC network of the individual before the request gets off the ground. Any inckling of stupidity or trickery will surely loose that CMC support.

Sean - I believe you time frame is wrong. Profits from a sale of a home that meets the 24 out of 60 month ownership occupancy rules (or meets certain military exemptions) are only taxed if more than $250k single/$500K married. Only investment properties can be sold/exchanged tax free and only under VERY strict rules wich in part require a third party to handle 100% of the money and require that there be ZERO cash out.