Best condos restrict rentals

DEAR BOB: My wife and I are interested in buying acondominium for investment purposes. But the condo homeowner association tellsus we cannot rent it to tenants and must keep it vacant or live in it. Can theylegally impose this restriction on us? –Joe M.

DEAR JOE: Yes. When you buy a condominium or any propertysubject to homeowner association CC&Rs (covenants, conditions andrestrictions), you agree to abide by them, plus the condo association bylawsand rules.

Purchase Bob Bruss reports online.

The best condo complexes have restrictions or completeprohibitions against rentals. When you see a run-down condo complex, chancesare it has a high percentage of renters who don’t care about proper maintenanceof the condo common areas.

When the percent of condo renters exceeds 20 percent to 30percent, most mortgage lenders either refuse to make new loans there or chargeabove-market interest rates because of the increased risk of foreclosure. Whenthere are many absentee condo owners renting their units, that is not a goodsign.

WHEN DOES TWO-YEAR REQUIREMENT END FOR $250,000 HOME-SALEEXEMPTION?

DEAR BOB: I purchased and moved into my current home in July2005. I sold my previous residence in September 2005 and claimed that $250,000home-sale tax exemption. When does my two-year requirement end for the $250,000exemption; is it in July or September 2007? –Tamaki K.

DEAR TAMAKI: If you used your Internal Revenue Code 121$250,000 exemption (or $500,000 for a qualified married couple filing a jointtax return) for the sale in September 2005, you cannot use that exemption againfor 24 months.

Presuming you owned and occupied the home purchased in July2005 since then, you will meet the 24-month minimum ownership and occupancytest in July 2007.

However, you are not eligible to claim use of IRC 121 againuntil September 2007 so wait until after that date to sell your currentprincipal residence. Ask your tax adviser for further details.

WILL HOME TITLE TRANSFER TO LIVING TRUST CAUSE PROPERTYTAX REASSESSMENT?

DEAR BOB: I am concerned that when we change the title onour home from my wife and me as joint tenants into our living trust, the localproperty tax assessor will consider this an ownership change and reassess ourhome to raise our property taxes or revoke our homestead exemption. Is thisgoing to be a problem? –Richard S.

DEAR RICHARD: A personal-residence title transfer from twoindividual owners to the same two individuals who are the beneficiaries oftheir revocable living trust does not cause property tax reassessment orhomestead revocation in most jurisdictions.

However, in Florida some county recorders and assessorsinsist the words “revocable living trust” be clearly stated on thedeed.

Just to be safe, before transferring title please consult anexperienced local real estate attorney and/or the county deed recorder and taxassessor to check for any unusual local requirements.

The new Robert Bruss special report, “2007 Realty TaxTips: Eight Chapters of Tax Savings for Homeowners and Realty Investors,”is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif.,94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2007 Inman News

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