I have helped many homeowners in California and Arizona finance the purchase of an historic home. In Long Beach, CA, there are many areas are designated as historical districts. Their historical status may give you, the potential homeowner, gain a little more than a roof over your head. Their statesman-like beauty, the stories that come with the home, and best of all, they may be qualified for favorable tax status under the Mills Act.
Laurie Manny, nationally known, Long Beach Realtor, answered a few questions for me about historic homes in Long Beach.
"When you enter into a contract to purchase a home protected by the Mills Act, you agree to follow predetermined standards with respect to the architecture and maintenance. You are, in effect, agreeing to be the 'steward' to a piece of California history" explained Manny. The benefits, however, can be astounding. "Jim Mills introduced this little known Act in 1972. It allows for potential tax benefits that can be as high as 60%!" Laurie continued by explaining how the Mills Act has benefited Long Beach. "Returning tax dollars to historic homeowners benefits the community as a whole. The owners maintain the homes which keeps property values high. The care and restoration of the homes comes from local workers and materials which, in turn, proliferates throughout the community"
I asked Laurie what one piece of advice would she have for a potential homeowner purchasing an historic Long Beach home. "Simple...keep cash reserves. Homeowners should be aware that an historic home may require maintenance. While there may be tax benefits, it helps to have a ready stash of cash available."
I had an opportunity to conduct a teleseminar about the benefits of strategic equity positioning for a group of Long Beach Realtors. I explained how it is important to counsel homeowners about cash reserves and establishing lines of credit. In the case of an historic homebuyer, this strategy makes complete sense. The Mills Act is applicable to both owner occupants and investors. Homeowners who have had success owning a home in the historic district may want to plan for their retirement using a similar property in a Long Beach historical district.
Don't put all of your eggs in one basket, the maxim goes . In the case of the would be historic home buyer, it might make sense to say "Don't sink all of your money into a big downpayment".
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Brian Brady is America's Most Opinionated Mortgage Broker. He is featured on the nationally known Bloodhound Blog, NELA Live, the Active Rain Real Estate Network, and is a regular editor and author on the Zillow.com Real Estate Guide.
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