DEAR BOB: Please explain the pros and cons of leaseholdestates. We live in a development with 99-year land leases. Many residentsthink the land lease is a good deal. I don’t. At what point in time will ourhouse become unsaleable? –Robert S.
DEAR ROBERT: Buying a house with a 99-year land lease isfine for the first few buyers (because those owners won’t be around when the99-year land lease expires and the title to the houses reverts to theleaseholder).
Purchase Bob Bruss reports online.
Unless you have an option to acquire the title for the lotbeneath your house, as the years go by your house becomes worth less and less.By the 99th year your house becomes worthless. After the lease expires,ownership of the structures on the land reverts to the landlord. For fulldetails, please consult your attorney or tax adviser.
WHAT IS A LIFE ESTATE?
DEAR BOB: What is a life estate? My mother-in-law owns twoproperties subject to a life estate. She deeded one parcel to my husband. Isthat legal? –Kay K.
DEAR KAY: A life estate means a life tenant has the right tooccupy a property for his or her lifetime. After that individual passes on,then the remainderman who holds the legal title, subject to the life estate,can occupy, sell or do whatever he or she wishes with that property.
From your description, it sounds like your husband is theremainderman of a parcel, subject to a life estate for another person.
If your mother-in-law owned the property as theremainderman, after the life estate, she is free to convey her remainderinterest to whomever she wishes. However, your husband has no legal right toenter that property because the life tenant has exclusive occupancy. For fulldetails, your husband should consult a local real estate attorney.
CAN HOME SELLER CLAIM $500,000 TAX BREAK WITH A REVERSEMORTGAGE?
DEAR BOB: We have owned and lived in our home for 45 years.Now we want to sell it. Can we claim that $500,000 principal residence sale taxexemption although we obtained a reverse mortgage six years ago? –Ed and BeaC.
DEAR ED AND BEA: Yes. Placing a senior-citizen reversemortgage on your principal residence has nothing to do with your InternalRevenue Code 121 $500,000 (up to $250,000 for a single homeowner) entitlement.To qualify for the sale exemption, you must have owned and occupied yourprincipal residence at least 24 of the 60 months before its sale.
The new Robert Bruss special report, “Probate PropertyProfit Secrets Revealed,” is now available for $5 sent to Robert Bruss,251 Park Road, Burlingame, CA
94010 or by credit card at 1-800-736-1736 or instantInternet delivery at www.BobBruss.com.Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News