Real estate tax break, exchange get rolled into one

DEAR BOB: My husband and I are in the process of selling ourprimary residence and 21 acres of adjoining land that will probably bedeveloped for houses by the buyer. We know our residence qualifies for the$500,000 principal residence sale tax exemption of Internal Revenue Code 121.But can we subdivide the property so the land portion can qualify for atax-deferred exchange under Internal Revenue Code 1031? –Erin H.

DEAR ERIN: You don’t need to go through all the hassle ofsubdividing the property into two parcels. All you need to do is find a tax attorneyor tax adviser, probably a CPA, who is familiar with Internal Revenue Procedure2005-14. You will probably also need to hire an experienced appraiser toallocate the value between the residence and land portion of the sale.

Purchase Bob Bruss reports online.

This tax procedure allows you to claim, in one transaction,both the IRC 121 principal residence sale tax exemption and the IRC 1031tax-deferred exchange benefits for the vacant land portion of the property.

NO EASY WAY TO GET EX-BOYFRIEND OFF THE HOME TITLE

DEAR BOB: My daughter purchased a house with her boyfriendin July 2005. She put up $17,000 for the down payment. He did not contributeanything. He has now decided that he needs to leave. My daughter worked veryhard for that house and wants to keep it. How does she get his name off thedeed? –Moya J.

DEAR MOYA: Why in the world would your presumably sanedaughter add her boyfriend’s name to the house title when she paid the entire$17,000 down payment? I guess the old saying “Love is blind” is stilltrue.

If your daughter can’t convince the ex-boyfriend to sign anotarized quitclaim deed to be recorded, she should consult a local real estateattorney who will probably advise bringing a quiet title lawsuit to have hisname removed from the title.

Unless he contributed to the mortgage payments and otherexpenses, the judge will probably rule against him and quiet title in yourdaughter’s name. But this will be a very expensive lesson to learn.

REVERSE MORTGAGE IS BETTER THAN GIVING AWAY YOUR HOME

DEAR BOB: I am 76. Many years ago, I bought my home for$14,000. Today, it is worth close to $1 million. When I die, I want my twochildren to receive it. To get out of poverty, I would like to give it to themnow in return for them paying me. What is the best way? –Warner J.

DEAR WARNER: If you are in good health and want to stay inyour home at least five years, a reverse mortgage is ideal for your situationto get out of poverty. Then you can maintain control of your house, includingthe right to sell it if necessary to pay for your care in an assisted livingcenter or other facility.

With a $1 million house, thanks to a reverse mortgage, youcan live like a king without being dependent on your adult children to pay yourincome every month. When you pass on, you can name them in your will or, betteryet, your living trust (to avoid probate costs and delays). Meanwhile, youstill own your house and can do with it whatever you wish.

More details are in my special report, “The Whole TruthAbout Reverse Mortgages for Senior Citizen Homeowners,” available for $5from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 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 2006 Inman News

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