The sellers were upset because now the genie was out of the bottle and the home couldn’t be sold as a duplex, lowering its value considerably. And no mortgage lender would finance an illegal duplex. Rather than walk away from the deal, the buyers offered to pay the appraised value for the home.
The unhappy sellers struggled with the offer for a couple of days and finally accepted the grim reality that they had few options and signed the deal. Brandon and Julie got a great deal on their ‘‘duplex’’ and plan on renting the basement.
While they will have to sell the home down the road as a single family, that shouldn’t present a problem because they bought it for its appraisal as a singlefamily dwelling. The lesson, here, is that before you buy a house with an apartment, check the zoning and verify existence of any other required permits. It can save you costly tax, insurance, and zoning headaches later on.
Tips: Before you rent out your home or buy a home with an apartment, check with a tax professional to make sure it’s in your best interests. Also see IRS publication 523, ‘‘Selling Your Home.’’ In addition, for more tax information on renting out your home, check out IRS publication 527, ‘‘Residential Rental Property.’’
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