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i just keep thinking of our tenant who said no to 100k and kept thinking we would up it. eventually she had a stroke and died and got nothing . we got the apartment back , sold it and that was the end .
So, there is such a thing as karma. I just sold my place and gave the tenants notice and they are making very unreasonable demands. I was glad to read your post.
This is not true, real estate lawyers are cheap especially if it involves a simple drafting of a contract and reviewing. It should not cost OP more than $500 for legal advise and closing of the deal. In addition my accountant only charges me $75 for tax filing per household while saving me thousands in tax payment, if I would have done it myself through turbo tax.
Most lawyers don't make a lot of money except for corporate lawyers, this is why corporation get away with a lot more than the average guy would ever be able to. The most expensive lawyer for most people would be a defense lawyer when you are in criminal and civil court.
I know someone people who went through the same thing the op went through. A lawyer did charge 500 dollars for advising and so forth. I know of lawyers who charged more for Closing the deal and so was additional money, even advisement on what to do with the money was additional 500. At the end the lawyer charged about 1.5k for services. Her buyout was 30k for an Harlem apartment. She used that money and is doing well in the south. Again 500 is cheap when you have the money if you don't have 500 dollars to see a lawyer that's if a different story. Why in life you have to save money for two things, legal advice/representation and medical emergency. Also good for you and your tax preparer for filing taxes for you in saving thousands of dollars.
Last what does your tax filing has to do with the op situation?
In box me the lawyer. I can sure use his his or her legal representation if they are that cheap when it comes to legality of apartments
First off, congrats on 75k which can be used as a tool for empowerment else where in America. 75k wont do much in NYC.
I don't think you need a lawyer, but to make things transitional, smooth and things that you don't understand a lawyer might be needed but mind you lawyers are not cheap. This is an earned income and it has to be reported or else the IRS and NYS department of taxiation will haunt you. 75k buy out is a lot of money. Me personally I would not negotiate anything 75k is a lot of money. I would high tail out and run out of the city with that money. I'd just be on the safe side and do a 1099, if you don't understand anything than get a lawyer.
75k is more than enough money to live off for a year. If you were into investing in your future it can pay a good chunk of college costs and if one goes to CUNY that more than pays for a degree. Even in NYC it's a tool for empowerment if you have your mind set in the right places. Of course it won't get you a place on Park Avenue but that cannot be a priority if you are poor.
i think if you are discussing taxes you need to understand how they work. much of that gain could end up not even being taxable by the fed as long as they accept it as a long term capital gain. if audited.
if anyone is interested michael kitces gave a good explanation as to how the zero capital gains tax brackets work. it can be tricky as to how it is calculated when you have other ordinary income . there is a good chance most of that pay out will be near zero tax levels to the fed depending on the op's income which does not appear to be alot.
a couple today can have 50k in income and have a 50k long term capital gain and pay as little as 4-5% effective tax rate on everything in total to the fed.
but remember nys taxes you fully on that 100k income less deductions and the special capital gains rates do not apply.
this is why good tax planning early on can really generate some pretty high retirement incomes at very very low tax rates.
when you have other income the ordinary income fills up the tax brackets first .
as michael illustrates with the tax brackets of 2014 , a couple with 50k ordinary income and 50k in long term capital gains will have 50k in income less about 23k in standard deductions and exemptions so they will 29,700 in taxable income that the 50k in capital gains go on top of.
the first 18,250 in in ordinary income fills the 10% bracket , the next 11,550 falls in the 15% bracket.
the next 44,100 in capital gains falls in the 0% bracket since up to 73,500 of income falls in the zero % bracket. the last 5900 of that capital gain gets taxed at 15%.
so you see that 50k capital gain had only a very small part being taxed by the fed. the couples total tax bill will be about 4500.00 bucks to the fed on 100k in income.
the couple’s total tax bill will be only $18,150 x 10% + $11,550 x 15% + $5,900 x 15% = $4,432.50, or an effective tax rate of only about 4.4% on $100,000 of total income!
the 75k pay out goes through the different capital gains brackets and much will be zero % . single will get more taxed than a couple but still 1/2 may escape federal tax .
Update: So I've heeded everyone's advice and decided to go for check. However, there's a new problem. We've signed the contract saying we'd be out by the 25th in exchange for the money. Got a lawyer to look over the contract and everything; he said it was good to go. We met him yesterday on the 26th at the apartment so he could check that we've moved everything out properly. He said he had $50K ready, but is still waiting on the rest, which should be ready in a week. The transaction hasn't taken place yet (keys for money), so everyone in my family is freaking out because they think the contract was "expired" on the 25th, he could be up to something, like claim the apartment abandoned because it's empty and so broken down (hasn't been renovated in over thirty years) and then start renovating, locking us out. I don't see how he could do that without getting into a lot of trouble. Should I be as worried as everyone else is?
Update: So I've heeded everyone's advice and decided to go for check. However, there's a new problem. We've signed the contract saying we'd be out by the 25th in exchange for the money. Got a lawyer to look over the contract and everything; he said it was good to go. We met him yesterday on the 26th at the apartment so he could check that we've moved everything out properly. He said he had $50K ready, but is still waiting on the rest, which should be ready in a week. The transaction hasn't taken place yet (keys for money), so everyone in my family is freaking out because they think the contract was "expired" on the 25th, he could be up to something, like claim the apartment abandoned because it's empty and so broken down (hasn't been renovated in over thirty years) and then start renovating, locking us out. I don't see how he could do that without getting into a lot of trouble. Should I be as worried as everyone else is?
You have a signed contract that a third party lawyer confirms is legit. I don't see any need for concern.
There is no "typical" buyout. It depends on where the apartment is located, who the current tenant is, what the current rent is, how much the landlord thinks they could reasonably charge new tenants for the unit. So anywhere from $0 to $200k.
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buyout
