DEAR BOB: My mother and father lived in their house for over40 years. Dad died in 1987 and my elderly mom continues living in the hometoday. She recently applied for a low-income housing assistance program toreplace the roof. When a title check was made, it shows title is still held inthe names of both my mother and my late father. The government agency refusedto pay for the new roof until my late father’s name is removed from the title.How can this be done? –Robert N.
DEAR ROBERT: You or your mother should consult a localprobate attorney. If your father died without a living trust, which could havetransferred title without probate, it might be necessary to open a probatecourt proceeding to transfer his title according to the terms of his will.
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If he didn’t leave a will, then his title transfers accordingto the state law of intestate succession, presumably to your mother. Dependingon the circumstances, the local probate court can resolve this problem.
Your situation shows why it is so important to clear titlesshortly after an owner dies. It is usually much easier and less expensive to doso immediately than to wait many years.
REINVESTING IN REPLACEMENT HOME WON’T AVOID TAX
DEAR BOB: My wife and I plan to sell our house where we havelived about 45 years. Our net profit will be around $700,000. We plan to”downsize,” take our $500,000 tax exemption, and buy a less expensivetownhouse for around $250,000. Will this qualify for 100 percent tax avoidance?–Henry R.
DEAR HENRY: No. If you sell your principal residence, whichyou and your wife have owned and occupied at least 24 of the 60 months beforeits sale, Internal Revenue Code 121 says you qualify for up to $500,000tax-free sales profits if you file a joint tax return.
However, you will owe long-term capital gains tax on theremaining $200,000 of your sales profit. Purchasing a replacement home, nomatter what its purchase price, won’t help you avoid tax on that extra $200,000profit. For full details, please consult your tax adviser.
NO NEED TO FILE FEDERAL ESTATE TAX RETURN FOR A SMALL ESTATE
DEAR BOB: In 2005 my mother died. Her total assets,including her rural house, were worth less than $200,000. Her will lefteverything to her sister. The probate court handled the distribution as a”small estate.” As estate executor, I was told I don’t have to fileany federal estate tax return. Is this correct? –Jerome J.
DEAR JEROME: Yes. Because your mother’s total estate waswell below the federal estate tax exemption of $1.5 million for 2005 ($2million for deaths in 2006), no federal estate tax return needs be filed foryour late mother.
However, as executor of her estate, if she had any taxableincome in 2005, a 2005 income tax return must be filed. For full details,please consult your tax adviser.
The new Robert Bruss special report, “How to Sell YourHouse or Condo for Top Dollar With or Without a Real Estate Agent,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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