Second Chance Offer And Tax Answer

I’ve relisted the tiny house on eBay… this time with no reserve.

It looks like in the 12 or so hours since I listed it, it already has 20 bids up to $1,575.

If you recall, there were a total of 23 bids last time around so this time will probably be better. It’s kinda nice to see the highlighted phrase, “Your item will sell.”

Check out the listing here:

In other news, I also spoke to a tax attorney this past week. The way it’s working for me is that I have two different things going on.

I have all the expenses associated with building and marketing the tiny house which are a business expense write off for 2010. And then I have the tiny house and any capital gains or losses once it’s sold.

Any supplies I actually used get rolled into the cost basis for the capital gains calculations. I could have also depreciated the trailer for the year but then that would have to be recaptured when it sold. I take that to mean it would have been a reduction in the cost basis and thus lower tax write off for this year.

If I were going to be building these on a regular basis the situation would probably be different. I know for example that you’d need an auto dealer’s license if you wanted to sell five or more in a year in Texas.

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Tiny House Contract

The buyer I had lined up fell through. During the process I drew up a bill of sale based on a few samples I found online. I’m posting it here for anyone else to use as a template. Of course check with your local laws and practitioners.

Unless another buyer steps forward this week, I’m going to re-list the tiny house on eBay on Sunday. The top bid was $4,700 (reserve not met) so I will consider offers less than $10,000 at this point.

Now that the weather is nicer, we’ve cleared the holidays and there won’t be a reserve, I expect the winning bid to be more than last time.

I’m still working on the plans. It’s going to be an all inclusive how to design and build your own tiny house manual. That’s what several potential buyers have told me they were planning to do instead of purchasing a fully built one.

Download the Tiny House Bill Of Sale

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Accounting Error, Reduced Price

I based the $15,000 asking price on the tiny house was based on a summation of all the expenses I’d incurred since I began building the tiny house almost a year ago. Those expenses came out to $8500.

What I hadn’t considered was that included a number of tools I purchased, mistakes I made and supplies I didn’t end up using at all. Earlier this week, I went through all my receipts to create a supply list for the plans I’m compiling.

Turns out that including all the 10% discount cards I used at Lowe’s, I only spent $6000 on supplies that I actually used. That makes a big difference.

Another consideration is that the highest big I got on eBay was $4700. Granted, that was about two weeks ago which could be one of the worst weeks of the year to try and sell anything – people have generally already allocated the month’s budget and are still recovering from the holidays.

The other thing is that I’d set a reserve of $9999 on it. I know fewer people would bid on it even though there were 23 bidders. I’m figuring even more people will bid on it if there’s no reserve because you know you’ll actually get it.

So here’s the plan now. I’m reducing the asking price to $10,000. If it still hasn’t sold by the end of February, I’m going to put it on eBay again WITHOUT a reserve.

As an aside, I’ve applied to a few architecture grad schools for the fall. If anyone knows someone on the UT faculty, I’d appreciate if you could put in a good word for me. They’re one of the top 5 architecture schools in the country and have a great sustainable design program that I’d like to do. They’ll be reviewing applications in February.

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Jim Bruno’s Tiny House Documentary

Jim Bruno shot some video of me after the open house last month. He’s done some great editing work and put together a short documentary film you can see on Vimeo.

We did it in an interview format where he asked me questions regarding my tiny house and the tiny house philosophy in general.

Click the image to see the video.

UPDATE: The video was featured on Jetson Green today.

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Tiny Houses and Capital Gains Taxes

I was investigating the consequences of selling the tiny house and ran across something.

If the sale of the tiny house is treated as a capital gain, then I need to consider whether it is a short term or a long term gain. According to the Turbo Tax site, you must own the asset for over one year to be considered a long term gain.

A short term gain is taxed at the 35% rate while a long term gain is taxed at 0-15% depending on your tax bracket. So if the tiny house sold for $15K, we be talking about a tax liability of $2275 (assuming cost basis of $8500) if I sell it before February 22nd or $975 if I sell it after.

That kinda seems like a good reason to hold on to it for another month to let it become a long term asset. And until I sell it, I can continue to depreciate it as business property. When I either sell it or move in to it, I’ll have to stop the depreciation.

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Weekend Update

It was a mostly disappointing weekend.

Saturday morning I rented a truck to take the tiny house down to the Austin Home and Garden Show. The truck didn’t make it once we got off the driveway. I was able to get the truck backed up to the house but without the traction of dry ground, it wasn’t going anywhere.

It continued raining and by the time we realized we weren’t going to be moving the tiny house, the truck was stuck. We used boards, plywood, bricks, logs, and spent 3 hours trying to get the truck to just move its own weight back to the driveway.

The guy staying on the property had a come along winch and we used that to pull the end toward the driveway enough for him to be able to use his truck to pull us out.

After 3 hours of sogging it out in the mud, we had it in our minds that the rental place was partly responsible for renting us a truck that couldn’t pull itself out of the grass.

Now that I’m rested, I realize we shouldn’t have rented it in the first place given the weather. But Saturday, I tried arguing our case with the rental place to no avail.

Then Sunday, the eBay auction ended. Despite 23 bids, 150+ watchers and 3000+ page views, the top bid only ended up being $4700. I’d set the reserve at $10,000 so I’d at least recoup the cost of building supplies and a token amount for labor.

That said, I’ve had several calls but no one has made an offer yet. I realize that it often takes months to sell real estate and that January isn’t a good month for it. Nevertheless, I’m willing to entertain offers for less than the original $15,000 at this point.

If it doesn’t sell in the next month or so, my wife and I plan to move in to it when our lease ends the following month. That may end up being a blessing in disguise in the long run but this weekend wasn’t what we’d been expecting.

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Earthbag House In Austin

Over the weekend, I went and attended the Earthbag House open house here in Austin.

The builders have been working on it since December 2008. They have the exterior finished and will be working on the rammed earth floor next.

Watching their briefing was an interesting dynamic. One of the two builders clearly was more of a planner kind of person and lamented the fact that they hadn’t planned ahead for expansion or using alternate cooling methods.

The other builder seemed to be the type that just likes to dive in and get things done. He did admit that if they were doing it again he would have added in something more like a Roman cooling system.

In researching cooling systems, I found the wind catchers which are prevalent in Persian architecture. There’s a good article describing those here:

The plans from Cal-Earth that they’re working from are designed for the desert climate. There, you have a significant temperature drop in the evenings which allow the day’s heat gain to be dissipated out.

Here in Texas, it only drops 10-20 degrees in the evenings during the summer so once the house gets hot, it will stay hot. So those plans weren’t designed to be used in Texas.

Cal-Earth didn’t mention that fact nor that the plans they bought would have to be stamped again by a licensed architect/engineer in Texas.

Turns out that not only were they not supposed to use those plans but those plans were for educational purposes, not actual building.

Fortunately, by the time the city discovered the plans weren’t legal, they were already being built and so a quick engineering approval got them through the process.

It’s one thing to see the plan on the computer (they used a variation of the Double Eco-Dome). It’s another to be able to walk through it. The center rooms were spacious and the high ceilings gave a nice homey feel.

I don’t see how the bubble alcoves are going to work for bedrooms though. Maybe that’s why they’re labeled bedroom-niche on the eco-dome floor plan. To walk inside one, you feel there is a lot more space above your head than around you. I’m not sure even a twin bed would fit in one. They’ll definitely fit a half bath though.

I took a picture of one of the bubble alcoves but I couldn’t really get a good angle on it. It’s kind of like walking into an elevator with enough room to move to the side and then turn around and wait to get out.

One of the builders said this plan was originally designed as a UN disaster relief plan so there was a big community room and small alcoves where individuals could have privacy too.

To rectify the cooling issue, they build box windows onto the roof. Those windows can be opened with a long pole to allow heat to escape. They also plan to install window AC units.

You’ll probably also notice the bags are two different colors. I didn’t hear the explanation but I did hear them say the bags from Cal-Earth had evidently been left out in the sun prior to purchasing them and weren’t any good. They had to drive the roll all the way back to return it.

One building feature was that they had the mixture be wet like cement when they packed the bags. Because of that, they didn’t need to tamp anything down.

Also because of that, the ceiling began to slide toward the middle as they went up and workers were forced to use rebar to reinforce the angle. We’re not in a seismic region here so they opted not to use barbed wire.

Another planning issue was the doorways. To meet code here in Austin, they need 6’8″ rectangular passageways. The arches weren’t tall enough so he went back, knocked the top of them out and set concrete in them.

He couldn’t build arches that tall because then you get into doors that don’t fit the slope. One solution would have to been to build out the arches like buttresses as you’d see on an igloo.

Another interesting note was that they used a dirt/clay mixture from nearby Elgin that’s typically used for baseball infields. It would have just been too much trouble to filter through the riverbed type of soil they have there already.

The name of that company in Elgin is Fenske and their number is 512-285-2561. In looking them up, I didn’t find a website but they do have a review on City Search saying it’s a good product at a fair price but that the owner is rude.

All in all, I’m very glad that someone put in the effort to build one of these. As we keep pooling our resources and learning together, we’ll keep coming up with better and better options.

The folks at Earthbag House plan to offer workshops in the future. Join their list to be updated.

They also have additional pictures on their website.

Posted in Building Techniques, Philosophy, Planning, Regulation, Supplies | Tagged | 2 Comments

Tiny House On EBay!

Click image to go to listing

I posted the tiny house on eBay today. It was challenging figuring out which category it would fit into.

I opted for the RV section instead of the trailer section because I figured that’s more the appropriate audience though it has a trailer title.

As I was writing out the post, I saw the guidelines said you’d get more bids if you accept financing through their motor financing center. It came with the caveat that not all vehicles would be financed.

I contacted customer support to find out whether a tiny house would be considered for financing and after being transferred a couple of times, I found out their financing center is really just a referral service. It will end up with local lenders who will make the final decision.

This next weekend is the Austin Home and Garden Show. I’m tentatively planning to park it out front somewhere so that people going to the conference will see it and hopefully check out the eBay auction. The auction is scheduled to end at 3 pm next Sunday the 23rd so I’ll see about parking it nearby the day before.

Parking downtown at metered parking is free on the weekend in Austin. But with hundreds of people converging on the conference, I think I’ll need to get there super early to find two adjacent spots (house and truck pulling it).

Like I mentioned in the last post, I set the reserve at just over the cost of supplies. If you’ve been in the market for a tiny house, this could be your best opportunity to get one as inexpensively as possible.

Click the image above to go to the listing.

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Tiny House Registration And EBay

The registration for the trailer the tiny house sit on expires next month. I went ahead and renewed the registration online which was $55 for the trailer.

If I weren’t planning to move it, I wouldn’t have needed to renew it. If you plan to keep it parked for several years, there’s no need to renew it each year until you’re ready to move it again.

For those of you out of state, I usually pay around $45 annually for registration for my truck as comparison.

I’ve also had several people express interest in the house but no offers so far. I’m going to go ahead and post it on eBay on Sunday in the motor vehicles section.

I’ll post the link here too but I wanted to give anyone who was still thinking about it a heads up. I hadn’t decided whether to put a buy it now button or not. I’ll start the bidding at $1 to get the momentum going. I’ll set a reserve at just over what it cost me in supplies.

Hopefully I’ll get at least the current asking price. It should tell me something about the current market for tiny houses. So far, it mostly seems to be a novelty and for people who want to build their own.

If you want it before I put it on eBay, make me an offer before Sunday.

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Earthbag Open House In Austin

I just learned that there’s an earthbag project going on in Austin AND they’re having an open house this Saturday – January 8th from 10am to 12pm.

For more details, sign up for their mailing list on their home page here:

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