Homes for Warriors Sale - Should They Profit?

[micky]

www.floridatoday.com/story/news/2017/08/06/homes-warriors-house-sale/532471001/

Not sure how I feel about this. Should these people be able to sell a home that was gifted. They don't say why they want to sell. The house was meant to be lived in and for low income vets? Is this greed or smart of them? They now have a lawyer but how are they affording a lawyer if they couldn't afford a house to begin with. Stuff like this just boggles.

[Opti]

The city obviously screwed up, however, I don't think the recipient should be able to get a huge pay day by selling after a year of ownership. The article says the owners want to sell because of worries about how the city managed the program, but it looks more like they want to take advantage of the  local taxpayers while they can and get a 6 figure pay day. They may have not paid any money into the house as the agreements were ridiculously generous. Only a $50K mortgage no matter the value of the house, interest free, and PAYMENTS were NOT required to happen against the mortgage. In 15 years the mortgage would be forgiven.

I hope the city can rewrite all the agreements as no one seemed to think about how someone selling early would affect the grants the city used, etc.

[alabamagal]

It is example of government program with good intention that ends up getting abused or mismanaged.

There are a lot of areas of Palm Bay have affordable housing. Having a $200k house sounds pretty nice.

Lawyer probably gets money when house gets sold.

[milee]

This is another example of a government program that's poorly run, a waste of money and doesn't accomplish what it intended.  God knows how many millions the state, local and federal governments waste on boondoggles like this and they don't even have the most basic controls in place to make sure the funds are used the way the program intends.  Another example of why we need to eliminate BS programs like this and reform government "management" before we even talk about raising taxes.  

[Opti]

Aug 7, 2017 7:44:54 GMT -5 milee said:

This is another example of a government program that's poorly run, a waste of money and doesn't accomplish what it intended.  God knows how many millions the state, local and federal governments waste on boondoggles like this and they don't even have the most basic controls in place to make sure the funds are used the way the program intends.  Another example of why we need to eliminate BS programs like this and reform government "management" before we even talk about raising taxes.  

This is an example of a local government program that is badly run. I expect we will always have issues at the local level as few of the government employees are FT that administer such programs and rarely have the experience of administering similar programs. I'm not sure how you fix this at the local level.

[resolution]

It looks like it was run by a veteran's nonprofit group that had some grants from the city, which is a model that many small government advocates support. Clearly there was terrible oversight and the grant should have not been approved without better controls.

The Homes for Warriors programs started in 2013, when the Space Coast Paratroopers Association, a local nonprofit formed to help veterans, approached city officials with a noble idea. The plan was for the city to provide money from state housing grants and for the SCPA to provide volunteer manpower to keep costs down on refurbishing foreclosed homes to be turned over to the veterans.



The program was spearheaded by David Isnardi, a retired Army paratrooper who was one of the founders of the veterans' group. Isnardi was named Palm Bay's deputy city manager in 2015. Isnardi has taken a temporary leave from his post as a federal grand jury will be hearing testimony related to his business dealings with the city prior to becoming deputy manager.

[resolution]

Another thing I really hate about this program is that we should just be paying our disabled service members enough so that they can pay for things on their own merit and don't need to hit up a bunch of charities for former service members. I don't know how we ended up with this system where they end up on charity instead of being paid fair value for their contributions and sacrifices. It leaves the door wide open for people who want to use the system at the expense of others that made an equal sacrifice.

How many homeless vets are out on the streets right now, subsisting on free hot meals and homeless shelters? They should be getting mental health services and some kind of living support as a part of their fair compensation and not as someone asking for charity.

[Deleted]

I'm not a tax accountant but wouldn't they be facing a huge capital gains tax since they've lived there only a year?

There are better ways to do this. DS (not a veteran) bought a house at the end of the financial crisis under a program meant to stabilize neighborhoods and keep houses occupied by owners. He got a normal mortgage but with a smaller down payment, plus $12k in loans, forgivable over 4 years. He used the $$ to replace windows. As I suspected, the forgiven amounts every year became taxable income. He was not happy! Seven years later, he, DDIL and the granddaughters are happy there.

[tallguy]

Homes for Warriors Sale - Should They Profit?

No.  The house should be given back to the program.  

[micky]

I live locally here and the whole situation was a mis-managed mess. The homeowners IMO aren't worried about the bad program, I do think they want to pocket the difference. Just goes to show how good intentions, without proper business minded oversight, can turn into a mess. Palm Bay has a lot of problems these days, this is just one of many.

[NastyWoman]

Aug 7, 2017 10:56:14 GMT -5 micky said:

I live locally here and the whole situation was a mis-managed mess. The homeowners IMO aren't worried about the bad program, I do think they want to pocket the difference. Just goes to show how good intentions, without proper business minded oversight, can turn into a mess. Palm Bay has a lot of problems these days, this is just one of many.

And in doing so, they make help for future vets less likely. People don't like to be taken advantage of and they do tend to remember the bad things mostly (take that Red Cross)

[tskeeter]

Aug 7, 2017 9:46:00 GMT -5 @athena53 said:

I'm not a tax accountant but wouldn't they be facing a huge capital gains tax since they've lived there only a year?

There are better ways to do this. DS (not a veteran) bought a house at the end of the financial crisis under a program meant to stabilize neighborhoods and keep houses occupied by owners. He got a normal mortgage but with a smaller down payment, plus $12k in loans, forgivable over 4 years. He used the $$ to replace windows. As I suspected, the forgiven amounts every year became taxable income. He was not happy! Seven years later, he, DDIL and the granddaughters are happy there.

Nope.  No taxes.  Gains on the sale of a home that are less than $500K are not taxable.

Of course, the house was a gift.  As a gift, the cost basis of the house that the vet was selling would be what the donor organizations paid for the house.  So, if the donors paid $175K for the house, you would subtract the $175K from the selling price to see of your gain exceeded the $500K threshold to make your gain taxable.

[Deleted]

Aug 7, 2017 18:42:19 GMT -5 tskeeter said:

Nope. No taxes. Gains on the sale of a home that are less than $500K are not taxable.

I believe that's true only if you lived there 2 out of the last 5 years.

[tskeeter]

Aug 7, 2017 18:49:23 GMT -5 @athena53 said:

Aug 7, 2017 18:42:19 GMT -5 tskeeter said:

Nope. No taxes. Gains on the sale of a home that are less than $500K are not taxable.

I believe that's true only if you lived there 2 out of the last 5 years.

Yes and no.

The basic rule is two of five.

Then there is the long list of prorations and exceptions to the two of five requirement.  Divorce, work relocation, and on and on.

In most cases, at least a portion of the gain ends up being sheltered from taxes.

[NomoreDramaQ1015]

Personally I feel wonky about it but if there are no rules that they can't sell the house and pocket the money then I am not going to judge them for selling it.  Whoever designed the program is the idiot in this scenario.