DGAA bLAWg

Considerations for Owning a Vacation Home

Web Admin - Monday, August 31, 2015

Illinois real estate lawyerWhen owning a vacation home, there are several issues that need to be considered, including estate planning, how the property will be owned, and potential tax implications. If you plan on purchasing a vacation home with a friend or a family member, deciding how the property will be owned is important. Ordinarily, this type of ownership is what is known as tenancy in common. Under a tenancy in common ownership, each owner is named on the deed, along with each owner’s respective ownership percentage.

An alternative is for all of the prospective owners to form a limited liability company (LLC) and have it purchase and own the home. While this does create the additional task of forming the LLC, the individual assets of each member of the LLC are protected. A disadvantage is that the individuals of the LLC cannot claim property tax or mortgage interest deductions.

Tax Issues

The capital gains tax applies to the portion of the proceeds (upon the sale of a home) that exceeds the purchase price of the property plus the cost of any improvements made. For most taxpayers, the tax rate for long-term capital gains is 15 percent. An important provision of the tax code is the primary residence exclusion to the capital gains tax. This exclusion allows for married couples to exclude up to $500,000 ($250,000 for single owners) in capital gains for the sale of a principal residence.

Critically, the home must have been the principal residence (where you and your spouse live) for two of the last five years. This period does not need to be consecutively; rather, the home must have been the principal residence for a total of 24 months out of the last five years. The primary residence exclusion can be used multiple times, but cannot be used more than once every two years.

In relation to vacation homes, ordinarily the primary residence exclusion cannot be used (as a vacation home is normally not the principal residence). However, if the vacation home is established as the principal residence (by satisfying the two out of the past five year rule), the exclusion can be used. This may be very beneficial if a vacation home significantly increased in value.  

Passing Home to Heirs

Often, owners of vacation homes desire to keep those homes within the family. As a result, this requires planning for how the home will be passed down. There are numerous different methods of leaving property to a beneficiary. Each of those methods has different advantages and disadvantages. It is important to keep in mind that the following only briefly describes just three of the methods for passing on property. For more detailed information about estate planning, you should speak with an attorney.

For example, property can be passed to children or other heirs upon the owner’s death. This creates a step-up in basis for the beneficiary, which is a large advantage should the beneficiary sell the property. It also allows for the owner to retain complete control until death. However, it is not a tax-friendly option for the owner.

Alternatively, an owner can give the property as an outright gift. Under this method, the owner transfers the property by deed to the beneficiary. This accomplishes an immediate transfer of ownership. However, the federal gift tax limits the amount that can be transferred. Additionally, the step-up in basis is lost.

Finally, one option that is becoming more popular is to place the property into a trust for named beneficiaries. Under this plan, the owner reserves the right to use the property for a specified period of time. After the trust term expires, the beneficiaries take ownership of the property, with significantly reduced, or eliminated, federal and state taxes. Critically, for this method to work, the person who formed the trust must out-live the trust term.

For more information about the ownership of a vacation home, reach out to an experienced Illinois real estate attorney today. Our firm proudly represents individuals throughout the northwest suburbs, including the communities of Inverness, South Barrington, Arlington Heights, Long Grove, Mount Prospect, Riverwoods, Schaumburg, and Kenilworth.

About the Author: Attorney Jay Andrew is a founding partner of Drost, Gilbert, Andrew & Apicella, LLC. He is a graduate of the University of Dayton School of Law and has been practicing in estate planning, probate, trust administration, real estate law, residential/ commercial leasing, contracts, and civil litigation. Since 2005, Jay has been a Chair of the Mock Trial Committee for the Annual Northwest Suburban Bar Association High School Mock Trial Invitation which serves over 240 local Illinois students each year.

Remedies for Condominium Unpaid Assessments and Fines

Web Admin - Friday, August 07, 2015

Illinois vacation home fines, real estate attorneyA condominium or townhome association has the ability to assess unit owners with common expenses and fines (collectively, “assessments”). When unit owners fail to pay these assessments when they become due, the association can pursue legal action to enforce payment. These actions can result in significant consequences against unit owners, including the potential for eviction.

Foreclosure and Eviction

One option for an association is to place a lien on the unit, which often occurs automatically when an assessment is not paid. If the past due assessment is still not paid, the lien may be foreclosed on in court. This will result in a court-ordered sale of the owner’s equity in the unit. Further, foreclosure is possible regardless of whether the unit owner is current on all mortgage payments.

Under Illinois law, it is also possible to evict a unit owner or tenant who is delinquent on the payment of any assessments. To initiate this process, the association must serve on the unit owner, through the mail, a 30 Day Notice and Demand for Possession (demand, with return receipt requested. If the demand is properly mailed, effective notice is deemed to have occurred, which means that the demand does not actually have to be received by the unit owner.

The effect of the demand is that a unit owner has 30 days to pay the outstanding amount. If the unit owner fails to make this payment, an association can sue to evict the owner from the unit through a forcible entry and detainer action. Included in the lawsuit will be a claim for all unpaid assessments and reasonable attorney fees and costs.

In some circumstances, partial payment may resolve the issue because an association can agree to withdraw the demand in exchange for partial payment. However, if the association does not agree to withdraw the demand, partial payment does not affect the eviction or demand. If after 30 days the partial payments do not total the entire amount due, the association can proceed with the forcible entry and detainer action.

If successful, the court will enter a judgment evicting the tenant or homeowner. However, by law, any enforcement of the eviction judgment must be stayed for at least 60 days, but not more than 180 days, at the discretion of the court.

After the eviction is complete, the association can lease the unit for a period of up to 13 months (which may be extended by court order) until all unpaid assessments have been paid. After all of these have been paid, the unit owner can regain possession of the unit by filing a motion with the court to vacate the judgment of possession.

Help with Real Estate Legal Issues

If you would like more information about real estate transactions or how disputes related to real estate are resolved, speak with a skilled Illinois real estate attorney today. Our firm provides diligent representation for individuals throughout the northwest suburbs, in communities such as Mount Prospect, Inverness, Palatine, Long Grove, and Riverwoods.

About the Author: Founding partner of Drost, Gilbert, Andrew & Apicella, LLC, Colin Gilbert, received his J.D. from Chicago-Kent College of law in 2005. Colin argues cases across many practice areas including criminal defense, collections, civil litigation, real estate law, and corporate law. Colin is an active member of the Board of Governors of the Northwest Suburban Bar Association and the Illinois Creditors Bar Association. He is currently Vice President of the Arlington Heights Chamber of Commerce, and is a Commissioner for the Village of Arlington Heights. Colin has a 10.0 Attorney rating on Avvo, and was named one of the 2014 “Top 40 Under 40” Trial Lawyers in Illinois by the National Trial Lawyers Association. 


Recent Posts


Tags

low-ball insurance settlement boating under the influence how to avoid common denials of life insurance claims School Visitation Rights Act Illinois workplace lawyer Illinois personal injury lawyer license revocation Illinois traffic ticket lawyer Palatine civil attorney agent Schaumburg food poisoning DMV Chicago life insurance attorney IRA benefits involuntary manslaughter probate process head on collisions power of attorney for healthcare Crystal Lake accident attorney Barrington litigation attorney comparative negligence Buffalo Grove criminal defense lawyer real estate lawyer motorcycle accident Buffalo Grove corporate attorney boating DUI traffic offenses Home Sale Contingencies Barrington civil litigation attorney Illinois medical malpractice claim Palatine punch death Barrington personal injury attorney irrevocable trust Fourth of July Palatine trusts lawyer gift taxes underage DUI medical malpractice compensation coronavirus South Barrington real estate lawyer Barrington real estate lawyer overtime pay Barrington boating accident attorney Crystal Lake tax lawyer liens Crystal lake insurance dispute attorney deadly crashes contracts Palatine real estate lawyer medical malpractice claims bicycle accidents Landlord Tenant Ordinance Affordable Care Act Barrington estate planning attorney elder law car crash injuries child safety uninsured motorist Des Plaines Illinois estate planning Rolling Meadows boating crash lawyer Buffalo Grove personal injury lawyer Buffalo Grove injury lawyer small business Arlington Heights insurance attorney texting while driving Class A misdemeanor Schaumburg personal injury lawyer Barrington personal injury lawyer fiduciary rule delay criminal law Arlington Heights personal injury attorney breach of contract Self-Directed IRA Accounts bike accident beneficiary complications medical research Chicago attorney anesthesia errors life insurance claim denial, denial of life insurance claim elder abuse unfunded trust accidental death benefits Palatine corporate attorney medication errors car crash digital information cell phone accidents underfunded trust Barrington employment attorney insurance claim delay Schaumburg injury lawyer mortgage guardianship attorney living wills employment contract, employment law, employment at-will, Deer Park employment law attorneys, contract, car crashes fault based insurance Rolling Meadows criminal attorney hiring employees employee rights Chicago employment lawyer Kenilworth estate planning attorneys insurance dispute attorney life insurance lawyer Palatine life insurance lawyer drug crime Arlington Heights employment attorney Rolling Meadows litigation lawyer controlled substance Des Plaines personal injury lawyer Illinois mortgages construction accidents financial advisors Illinois will lawyer overtime violations consent to a search Arlington Heights lawyer Illinois law preventable medical errors Crystal Lake will lawyer Buffalo Grove car accident lawyer living trust vs will estate attorney Schaumburg car accident attorney personal injury accidents Barrington workers compensation attorney Chicago biking tips employee discrimination digital media accounts, estate planning, Arlington Heights estate planning attorney, disability benefits golf accidents Illinois collections attorney startup company Barrington business law firm Rolling Meadows medical malpractice lawyers owner responsibility motorcycle accident lawyer advance healthcare directive BAIID DUI defense Inverness estate planning lawyer Deer Park criminal attorney digital evidence fiduciary rule Illinois tax attorney condo defective products health insurance dispute drug crimes lawyer Illinois employment attorneys Crystal Lake car accident lawyer installment contracts traffic accidents Deer Park traffic accident attorney Schaumburg civil litigation attorney internet Palatine law firm eluding a police officer vacation home fines loopholes pain and suffering Illinois insurance claims lawyers Rolling Meadows personal injury lawyer gift tax exemption, estate planning, estate planning strategies, Illinois estate planning, South Barrington estate planning attorneys Rolling Meadows insurance dispute lawyers, insurance dispute tax attorney driving Illinois Transfer on Death Instrument Crystal Lake civil litigation lawyer independent contractor products liability drug crimes Long Grove wills and trusts attorneys rest breaks drug possession Illinois LLC creation insurance disputes underinsured motorist Palatine construction attorney hit and run accident Barrington criminal lawyer Buffalo Grove law firm Schaumburg criminal law attorney Arlington Heights accident attorney caregiver insurance denial appeals pedestrian-automobile accident pedestrian accident Arlington Heights injury attorney Long Grove real estate attorney Do Not Resuscitate Colin Gilbert Arlington Heights wills and trusts attorney workers comp liability drunk driving icy parking lots Illinois wills and trusts operating agreements DUI Inverness real estate attorney Rolling Meadows real estate attorney digital assets, digital fiduciary, estate planning, digital content, Long Grove estate planning lawyers distracted driving accident victims car accident Arlington Heights Attorney trustee Attorney Ken Apicella Rolling Meadows marijuana attorney medical malpractice Schaumburg personal injury attorney trench injuries Illinois employment laws llinois Real Estate Lawyers Association Crystal Lake employment attorney Illinois insurance dispute lawyers texting and driving traffic tickets Deer Park traffic lawyer Rolling Meadows employment law attorneys meal breaks Schaumburg estate planning lawyer Exclusions Long Grove estate planning attorneys Arlington Heights real estate lawyer insurance claims construction contracts denial of life insurance in terrorem provision IRA trust transfer income distribution deducation car accident lawyer TBI jet ski accidents blood alcohol content Crystal Lake business law attorneys dealing with problem employees denied insurance claims Illinois red light cameras DGAA Illinois car accident attorney employment contract product liability expungement personal injury lawyer mass shooting Illinois employment law firm whistleblower protections Crystal Lake car accident attorney Illinois driving without license LLCs license reinstatement defective products lawyer institutional trustee corporate law first degree murder comp time Schaumburg estate attorney workers compensation benefits Rolling Meadows insurance dispute lawyers trucking accident lawyers fatal car accidents Jay Andrew Deer Park motorcycle accident lawyer digital assets Illinois Human Rights Act Illinois medical malpractice attorney breathalyzer test Mount Prospect wills and trusts lawyers crossover accidents commercial leases Barrington Traffic Lawyer vacation home insurance agents Barrington drug crime attorney pregnant women privacy laws Des Plaines real estate attorney Rolling Meadows insurance lawyer marijuana Chicago insurance law firm Schaumburg criminal attorney Arlington Heights pedestrian accidents changes to mortgage law Chicago estate planning Illinois business law atorneys Schaumburg wrongful death attorney boating accidents Inverness insurance attorney power of attorney estate tax Barrington estate planning lawyer Illinois pedestrian accident attorney Des Plaines collections attorney Inverness civil lawyer ken apicella federal regulations for LLCs denial of insurance claim Rolling Meadows traffic attorney liability claims Palatine employment attorney Illinois personal injury lawyers Liquor Control Act civil rights violation Rolling Meadows personal injury attorney Schaumburg probate attorney new real estate form estate planning lawyer holiday statistics Illinois employment law top life insurance claim denials traffic deaths Rolling Meadows Attorney Arlington Heights TBI attorney unauthorized overtime sole proprietorship hands free device Fair Labor Standards Act Crystal Lake injury attorney pet bites Rolling Meadows tax attorney cause-of-death exclusions Palatine civil litigation lawyer taxes cell phone tower data pet law insurance claim denial premises liability Rolling Meadows life insurance claim denial attorney Des Plaines criminal attorney Arlington Heights trucking lawyer Rolling Meadows corporate lawyer blended families Illinois insurance claim attorney Federal Food Drug and Cosmetic Act back injuries Buffalo Grove real estate attorney Crystal Lake pet attorney Rolling Meadows criminal lawyer Des Plaines pet law attorney Illinois Wage Payment and Collection Act revenge porn Arlington Heights wills and trusts lawyers Joliet general practice lawyers insurance denials Illinois real estate Des Plaines injury law firm Illinois traffic attorney Schaumburg corporate attorney Illinois speeding lawyer Illinois real estate closing Crystal Lake traffic lawyer insufficient documentation Chicago traffic lawyer Riverwoods estate planning lawyer Illinois job attorney traffic violations natural gas Schaumburg Attorney Illinois Trust Code Illinois insurance lawyer Chicago employment attorney Illinois employment law attorney Rolling Meadows DUI lawyer estate planning for college students Arlington Heights Traffic Lawyer Barrington Illinois estate planning lawyer real estate zoning BAC Schaumburg traffic lawyer Rolling Meadows car accident lawyers Illinois criminal defense attorney social media after death employment law, Illinois employment laws civil litigation attorney Barrington life insurance lawyer Schaumburg real estate lawyer creditors Buffalo Grove medical malpractice lawyers truck collisions Deer Park medical malpractice attorney IRS Whistleblower Claims Illinois business lawyer right to work Schaumburg personal injury lawyers Crystal Lake pedestrian accident lawyer Illinois estate planning attorney suspended license pay when paid contract Crystal Lake estate planning lawyer wage theft Family Medical Leave Act Deer Park accident attorney speeding probate claims process estate planning, digital assets, Revised Uniform Fiduciary Access to Digital Assets Act, Illinois digital assets, Illinois estate planning, Buffalo Grove employment lawyer insurance claim Illinois injury lawyer Crystal Lake insurance lawyer BUI Illinois elder law attorney rent to own real estate contracts slip and fall accidents home inspection lawyer personal injury claim Illinois lawyer Illinois jet ski accident lawyer bad faith insurance claims Rolling Meadows Traffic Lawyer ACA Des Plaines DUI attorney job lawyers drunk driving statistics Palatine probate lawyer Inverness probate lawyer Illinois civil litigation lawyer life insurance claims Illinois defective products attorney Palatine employment law lawyer unpaid overtime Illinois construction accident attorney rumble strips Palatine insurance lawyer Des Plaines tax law firm clemency insurance disputes, Illinois insurance disputes, Illinois insurance dispute attorneys, denied insurance claims, Arlington Heights insurance dispute attorneys car accident lawyers Chicago will attorney Palatine traffic accidents trust payments Illinois small business healthcare Palatine personal injury lawyer Buffalo Grove insurance claim dispute lawyers Schaumburg drug defense lawyer landlord tenant law Arlington Heights criminal lawyer Crystal Lake personal injury attorney Chicago car accident lawyer Inverness elder law lawyer manufacturing field sobriety test Arlington Heights tax lawyer South Barrington real estate attorney attorney fees Des Plaines personal injury attorney insurance claim denials minimum wage severance agreements insurance dispute Illinois insurance claim dispute lawyer living trust benefits Long Grove estate planning Arlington Heights wills and trusts lawyer Schaumburg employment law attorneys real estate attorney personal injury attorney workers compensation Palatine workers compensation lawyer insurance claim dispute Arlington Heights wills and trusts attorneys foreclosed rental property Illinois trusts attorney Arlington Heights estate planning attorney Barrington medical malpractice lawyers insurance attorney employee misclassification Palatine injury attorney business litigation personal injury claims Barrington attorney POA DUI attorney Buffalo Grove traffic lawyers sexual images wrongful termination, employment law, whistleblower protections, Illinois employment laws, discrimination in the workplace rollover car crashes Schaumburg insurance lawyers Palatine employment lawyer Illinois real estate lawyer Illinois workers compensation attorney Des Plaines drug crimes lawyer DUI penalities Food and Drug Administration's Food Safety Modernization Act employment lawyer Rolling Meadows traffic law firm Schaumburg life insurance attorney probate lawyer trucking accidents Kenilworth estate planning lawyer Inverness accident lawyer Buffalo Grove probate lawyer Des Plaines accident attorney insurance negligence insurance dispute, insurance dispute lawyers, insurance claim denial, insurance claim delays, Rolling Meadows insurance dispute attorneys FMLA estate plan Barrington employment law firm insurance claim dispute attorney ObamaCare compensatory time Illinois pet lawyer Illinois medical malpractice lawyers employment attorney distracted driving accidents Des Plaines medical malpractice attorney bicycle dooring accidents insurance agent negligence modern family estate planning personal injury, auto accident injuries, delayed injuries, serious injuries, Des Plaines personal injury attorneys Illinois Workers’ Compensation Commission Illinois Sales Representative Act real estate contract Illinois insurance attorney Mount Prospect elder law attorney Des Plaines insurance attorney drugs Illinois Smoke Detector Act Palatine estate planning lawyer Buffalo Grove traffic attorney employment law, meal breaks, rest breaks, hotel employees, Des Plaines employment law attorneys probate rollover accidents car collision Illinois boating accident lawyer Kenilworth estate planning attorney Rolling Meadows accident lawyer loss of consortium Arlington Heights employment law attorneys cell phone Schaumburg elder law lawyer construction accidents, personal injury, wrongful death, Arlington Heights personal injury attorneys, workers' compensation subcontractor Illinois corporate lawyer insurance adjusters Illinois bicycle safety Mt Prospect Attorney Des Plaines real estate lawyer Forcible Entry auto accidents slip and fall Des Plaines claims law firm license Illinois employment law attorneys Chicago estate planning lawyer Crystal Lake law firm Detainer Actions license suspension commercial leasing work unions Schaumburg employment attorney natural gas explosion Illinois DUI attorney Des Plaines drug lawyer Deer Park employment law attorney Buffalo Grove life insurance attorney murder Chicago corporate attorney traffic violations defense Palatine corporate law attorneys Arlington Heights car crash attorneys Crystal Lake medical malpractice law firm Rolling Meadows insurance attorney nursing home negligence brain injury Arlington Heights traffic attorney Palatine business attorney surgical mistakes Illinois wrongful termination lawyer Palatine traffic lawyer traffic laws criminal record Illinois estate planning law firm Inverness corporate attorney employees Buffalo Grove personal injury attorney wills Crystal Lake personal injury lawyer Illinois medical malpractice case most common reasons for life insurance claim denials Illinois traffic accident lawyer Colin H. Gilbert Barrington criminal defense lawyer Barrington employment law attorney Illinois workers compensation lawyer forming a corporation in Illinois appealing an insurance claim Employment Discrimination Law Inverness personal injury attorney dram shop law capital gains tax condo association caretaker rights Rolling Meadows drug defense attorney estate planning, death tax, succession plans, business estate plans, Barrington estate planning lawyers Crystal Lake criminal defense attorney Arlington Heights car accident lawyer Illinois personal injury dynasty trusts DNR traumatic brain injuries Legal Info preventing accidents IRELA Home Remodeling Repair Act criminal defense Rolling Meadows probate lawyer Long Grove real estate lawyer estate planning Chicago insurance claim attorneys Illinois wills and trusts attorneys sexual harassment Rolling Meadows employment law attorney Illinois motorcycle accident lawyer homestead rights federal crimes Arlington Heights personal injury lawyer civil litigation reckless homicide CAM paid sick leave medical marijuana Crystal Lake employment law attorney Inverness injury lawyer privacy GM ignition switches denied insurance claim living trust residential real estate estate planning trusts Illinois employment lawyer Crystal Lake bike accident lawyer estate planning attorney murder charges Crystal Lake medical malpractice lawyer swimming pools Deer Park personal injury lawyer material misrepresentation car accidents spinal cord injury Illinois trucking safety employment law Illinois insurance disputes Illinois employee rights attorney. Illinois personal injury attorney Policy Cancellation filing a medical malpractice claim murder defense automated cars traffic crimes Crystal Lake medical malpractice attorneys criminal Des Plaines Traffic Lawyer dog bites Palatine drug lawyer Rolling Meadows Illinois living will Illinois Probate Act of 1975 Illinois insurance claim dispute lawyers Mount Prospect real estate lawyer special needs trust Chicago will attorney, social media platforms, Illinois estate planning lawyer, Chicago trucking accident attorney no contest clauses trusts wrongful death Illinois workplace discrimination attorney Crystal Lake employment lawyer real estate leasing Des Plaines civil attorney Schaumburg estate planning attorney real estate Deer Park workers compensation lawyer Illinois traffic laws Retaliatory Discharge Deer Park DUI lawyer probate fees Illinois probate lawyer Rolling Meadows estate planning attorney healthcare claims Des Plaines personal injury lawyers pedestrian accidents Palatine criminal defense lawyer Illinois home inspection Arlington Heights medical malpractice lawyer traumatic brain injury Rolling Meadows business lawyer unpaid assessment probate claims Transfer on Death Instrument Palatine elder law attorney medical malpractice, missed diagnosis, delayed diagnosis, medical mistake, Deer Creek medical malpractice lawyers spinal cord injuries personal injury Inverness traffic law firm commercial real estate jet ski Crystal Lake traffic attorney Chicago lawyer problem employees life insurance policy lapse in policy college kids Schaumburg medical malpractice lawyer life insurance Illinois attorney Rolling Meadows personal injury lawyers workplace sexual harassment senior citizens deed transfer personal injury law firm trauma after an accident investment property Illinois rollover accident lawyers pedestrian injuries, pedestrian fatality Inverness real estate lawyer Deer Park real estate law firm Rolling Meadows employment attorney Illinois registered agent PTSD Barrington injury attorney wills and trusts marijuana crimes attorney landlord real estate attorneys Inverness DUI lawyer Long Grove estate planning attorney foreclosure Super Mario Thanksgiving Des Plaines motorcycle accident attorney Illinois traffic attorneys wrongful termination FSLA Schaumburg construction accident lawyer pizza emoji Palatine Attorney

Archive