Content: Issaquah homes - title insurance, capital gains tax

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Closing the Transaction

Everything hurdle has been cleared. Bringing the real estate transaction to a close.

→  We are almost there! The home passed all inspections. The buyer is receiving the necessary financing. Important: the signing of the documents takes place two or three days before the closing date!

→  Title has Transferred Free and Clear. The title search revealed no unpaid liens and all records were found in order. Based on this, the title company will issue to the lender a title policy for protection against any title defects. This policy, however, does not protect the buyer of the property against the loss of title rights.

→  The Lender is Satisfied. The lender agreed with the appraiser’s estimated value of the home. The buyer had been pre-approved by the lender earlier in the process.

→  It’s not over until it is over. The seller is responsible for property insurance and utility charges until the day the property changes hands. It is a good idea to coordinate the property insurance with the buyer, making sure there isn’t a day the home is unprotected against calamities.

→  The Money is in Escrow. The buyer’s earnest money has been deposited in the escrow account. The escrow company is holding all moneys and documents, such as the deed, until the contract has been signed, sealed and delivered. The accounting of the transaction, recorded in the closing or settlement statement, is the final act. For more information see U.S. Department of Housing and Urban Development.

If you are the seller you need to watch out for:

1. insurance protection (there is more than one kind of insurance),
2. deposits are in escrow (the transaction need to “fund”, and
3. tax consequences (consult a financial expert).

→  The Deal is Done! The closing agent or escrow holder will issue the signed closing statement separately to the seller and the buyer. The same agent or company will also send the seller the proceeds check.

→  But Uncle Sam is Watching. Even if the seller is using the money for the purchase of a new home there may be tax consequences. However, for principal residences sold after May 6, 1997, and if the home was owned for two years, there is NO capital gains tax if the proceeds from the sale did not exceed $500,000 for a married couple ($250,000 for an individual owner).

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