Good news about inheriting real estate

DEAR BOB: My husband and I own five rental houses together.We are very happy you encouraged us, years ago, to invest in rental houses. Bymaking extra mortgage principal payments, two of the rental houses are now freeand clear. The others will have their mortgages paid off in a few years. We nowenjoy the positive cash flow from the rentals. Meanwhile, the houses haveappreciated at least $100,000 each in market value. My husband recently had a”close call” with a heart attack, but he had a bypass operation andis now in good health. But it made me think about the many “stepped-up basis”questions you answer. Is there any limit to the number of properties forstepped-up basis? –Mildred H.

DEAR MILDRED: No. When a co-owner dies, whoever inheritsthat deceased owner’s share receives a new stepped-up basis on the inheritedshare. In community property states, the entire property basis is stepped up tomarket value on the date of death.

Purchase Bob Bruss reports online.

There is no limit to the number of inherited properties thancan receive a stepped-up basis to market value on the date of death.

Congratulations on buying those five rental houses toprovide for your retirement years. Not only are they great investments, butthey should also provide excellent tax shelter both now and when you eventuallysell them.


DEAR BOB: For tax and Social Security reasons, I am notmarried to the lady with whom I have been living for the last nine months inher house. As she has limited income, I have been paying the mortgage andproperty tax payments. Can I deduct the mortgage interest and property taxes onmy 2006 income tax returns? –Andrew W.

DEAR ANDREW: No. The reason is you are not legally obligatedto make those payments. Even though you paid them, Uncle Sam will not allow youto deduct the mortgage interest and property tax payments you voluntarily paid.For details, please consult your tax adviser.


DEAR BOB: Some time ago you mentioned there were two treeson your neighbor’s lot that were leaning toward your house. Fortunately, yourneighbor removed those trees before they fell on your house. That is my problemtoo. But my neighbor isn’t so nice. She refuses to either remove her dangerousold tree, which is sure to fall on my house in a windstorm, or let me pay tohave it removed (estimated cost about $650). As you suggested, my insuranceagent wrote her a letter explaining he viewed the tree and took pictures toshow the danger. He warned her that if my homeowner’s insurance has to pay adamage claim from her falling tree, my insurance company will sue her insubrogation (whatever that means) for her negligence. Is there anything furtherI can do, as I really don’t want a tree falling on my bedroom? –Ruth G.

DEAR RUTH: Unless your city code enforcement officer canassist you (it won’t hurt to ask), your only legal alternative is to bring aprivate nuisance lawsuit for abatement against your neighbor.

A local real estate attorney will be needed to obtain acourt injunction ordering the neighbor to remove the dangerous tree. However,the judge might not grant such an injunction so don’t get your hopes up toohigh.

The new Robert Bruss special report, “When It’s Smartto Prepay or Refinance Your Mortgage,” is now available for $5 from RobertBruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736or instant Internet delivery at for this column are welcome at either address.

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

Copyright 2007 Inman News

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