Question: I am 22 and for the last two years I have sold new cars. Although business has been slow lately, I have exceeded my quota every month. But I work for a high-pressure auto dealer and I no longer enjoy the job now that I have learned most of the sales tricks to use. The commissions are great, but my "job satisfaction" is low. A customer suggested I think about selling real estate. He said I am too honest to sell cars. What is the procedure to get started selling real estate? _ Jim B. Answer: Before you quit your auto sales job, take a few basic real estate classes at a nearby community college or university in the evenings. If you enjoy the classes, then consider taking the real estate sales license exam.
Selling real estate is the best job in the world (except for mine) because you will be your own boss and can work as hard or as little as you wish. But real estate sales is not a get rich quick career. The best realty salespeople work primarily on referrals from satisfied customers, so look at selling real estate as a lifetime career. An outstanding new book to study is How to Master the Art of Listing and Selling Real Estate by Tom Hopkins (Prentice-Hall, 1991, $19.95) available in stock or by special order at local bookstores.
Don't sell home yet
Question: We bought our home many years ago and it has appreciated to about $300,000 value. My husband retired last year from government work on a nice pension at 52. I am 49. We would like to sell our large home and buy a smaller one. But our problem is we will have a sale profit of at least $175,000. If we buy two replacement homes with total cost over $300,000 can we avoid paying tax on our profit? _ Bernice T.
Answer: No. Your question is frequently asked. Internal Revenue Code 1034, the rollover residence replacement rule, allows home sellers to defer their profit tax when selling their principal residence if they buy and occupy a replacement principal residence of equal or greater cost within 24 months before or after the sale.
However, since you can have only one principal residence, buying two replacement homes won't work to defer your profit tax. The result will be your profit is taxable up to the difference in prices. To illustrate, if you sell your old home for $300,000 and buy a replacement principal residence for $200,000, then $100,000 of your profit will be taxed and the remainder will be tax-deferred.
If you can wait to sell your home until your husband becomes 55, then up to $125,000 of your sale profit will be tax-free, using the "over 55 rule" of Internal Revenue Code 121. For example, you can subtract the $125,000 exemption from the $300,000 net adjusted sales price to arrive at a $175,000 "revised adjusted sales price." Then if you buy a replacement principal residence costing at least $175,000 in this example, tax on the remainder of your profit is deferred. For further details, please consult your tax adviser.
Robert J. Bruss is a nationally syndicated columnist on real estate. Write to him in care of At Home, St. Petersburg Times, P.O. Box 1121, St. Petersburg, Fla. 33731.