DEAR BOB: My 85-year-old mother is legally blind and hard ofhearing. Recently my wife and I bought the townhouse that adjoins our home andinvited her to live there so we will be readily available when she needs help.Since my mother will be selling her home of 40 years (its value is the bulk ofher assets), we would appreciate your advice on the best way to protect herassets. Should the new house be put into her name instead of ours by selling itto her although we want to keep this property after she moves out? Or shouldthe property be treated as a second residence or a rental property for taxpurposes? –Terry P.
DEAR TERRY: If your mother’s capital gain on the sale of herprincipal residence is $250,000 or less, and if she owned and occupied it atleast 24 of the last 60 months before its sale, her sale profit will betax-free thanks to Internal Revenue Code 121.
Purchase Bob Bruss reports online.
Since you already own the adjoining house, why sell it toyour mother and lose your tax benefits? I don’t see any advantage for you oryour mother.
If she pays you rent, treat the townhouse as a rentalproperty. Otherwise, treat it as a second residence on your tax returns. Fordetails, please consult your tax adviser.
PITFALLS OF PAYING ALL CASH FOR A NEW HOUSE
DEAR BOB: We will soon be buying a brand-new house andpaying cash. But I am concerned I will not have the protections of using amortgage lender or a real estate agent. Do you have any information on what towatch out for when buying a new house for cash? –Larry K.
DEAR LARRY: If you read my articles regularly, I do notrecommend paying all cash for any property unless you are so wealthy you won’tever need your cash again (just in case you buy a “bad house”).
My best advice is don’t pay all cash for your next home.Instead, pay 10 percent or 20 percent cash down payment and obtain afixed-interest-rate mortgage. If all goes well, after a few years then you canpay off the mortgage without the worry you tied up most of your cash. Ofcourse, be sure the mortgage doesn’t have a prepayment penalty.
DEAD EX-HUSBAND’S NAME ON TITLE CAUSES PROBLEMS
DEAR BOB: My daughter and her former husband divorced.Subsequently, he died. Together they owned property in the mountains. Shepresumed the mortgage company took his name off the mortgage. They didn’t. Eventhough he is now dead, his name is still on the mortgage and on the title. Shehas continued paying the mortgage. She wants to sell the property but cannot doso until her dead ex-husband’s name is removed from the title. Why would themortgage company not remove his name from the title? –Margery M.
DEAR MARGERY: You sound a bit mixed up. Having the deadex-husband’s name on the mortgage is irrelevant.
What matters is the title to the property. If his name isstill on the title, the mortgage company cannot remove it. The only way it canbe removed so your daughter can sell the property is to have his estateprobated.
Somebody is entitled to receive his interest in the propertyand it is up to the local probate court to determine who inherited thatinterest.
However, if your daughter and late ex-husband held title asjoint tenants with right of survivorship, then probate is not necessary. Yourdaughter can then clear his name from the title by recording with the countyrecorder a certified copy of his death certificate and her affidavit ofsurvivorship. For details, she should consult a probate or real estate attorneyin the county where the property is located.
The new Robert Bruss special report, “How to Sell YourHouse or Condo for Top Dollar in a Buyer’s Market,” is now available for$5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News