The804.com–Richmond VA Real Estate Blog

Washington Post (Robert Bruss)

• My husband and I own a house in Florida, where I live and work. He has a job in another state, where he lives. The house is in both our names and we may sell it in several years. Do we both have to live in the house the specified time to claim that $500,000 tax exemption?
• I am on active duty with the Navy. In 1999, I bought and lived in a home in Arizona while stationed there. In 2002, I was transferred under military orders to San Diego, so I converted my home to a rental. Is there any way armed forces members can extend that two-out-of-five-years occupancy tax rule to be eligible for the $500,000 capital gain exclusion for married couples? I understand I would still have to pay the 25 percent federal recapture tax on the depreciation I’ve deducted during the rental period.
• My wife has been in a coma for more than two years and I want to sell our rental property. There is no trust or will. Do I need a lawyer or is there some paper I can file on my own to sell the property?
• I own and have lived in my house for more than 10 years. This year I was married and my wife moved in, though she is not on the title. We will file a joint income tax return for 2007. After we sell the house, I expect a profit of more than $250,000. Are we eligible for my wife’s $250,000 exemption immediately? Or does she have to live in the house for two full years?
• For the past several years, I have politely asked my neighbor several times to trim his big tree, which was diseased. My insurance agent wrote him a letter warning him of the obvious rot, but the wealthy old geezer refused to hire a tree trimmer. About a month ago, a huge limb of his tree fell in my yard. When I asked him to remove the debris, he refused. My homeowner’s insurance company spent about $2,700, plus my $500 deductible, to remove the tree limb and repair the damage to my property. Now my insurance company is suing my neighbor for his negligence. Will the court require him to pay?
• About a year ago, my next-door neighbors bought their condo. The sellers failed to disclose the excessive noise and vibration from the upstairs unit. After my neighbors spoke with the tenants and landlord of the upstairs condo, they discovered there had been several letters involving the noise. My neighbors have requested a reversal of the sale, but the sellers refuse. They are now trying to sell the condo. However, when prospects read the copies of the letters in the sales disclosure packet, they lose interest in buying the condo. Is there any legal recourse for my neighbors?
• I am interested in buying a one-bedroom condo. Among the fees is a monthly land lease fee. The unit is in a condo building and is not like a mobile home sitting on leased land. Is this a scam? — Clodomiro G.
• About five years ago, I co-signed a home mortgage for my nephew and his wife. They were newlyweds buying their first home. They both had great jobs and great income but no credit history, so I volunteered to help them get a mortgage at my bank. Since then, they have done well. He has been promoted about five times and now earns more than I do. She recently quit work to have a baby boy, which they named after me. However, when I co-signed their mortgage, the bank insisted I go on the title to their modest house, which I did. They recently refinanced the mortgage to take out some tax-free cash, so I am now off the mortgage. But I am still on the title, although there is no reason for that. When I mentioned to my lawyer I plan to sign a quitclaim deed to them, he advised me not to do so because that would create a gift tax situation. As I never paid any cash for the house, have no equity interest in it and was merely on the title as a convenience, do you think I have any gift tax obligation?
• My sister signed her house over to her daughter and son-in-law because they said they would provide care for her all the days of her life. She is 79. She and her son-in-law don’t get along. The house is worth over $800,000. Have you ever heard of a person reversing a deed? — Sloan J.
• Can a condominium homeowners association enact specific times for repairs on individual units, such as from 10 a.m. to 4 p.m.? This seems unreasonable.
• I have been married 13 years. When we married, my husband moved into my home, where we still live. I never added his name to my title, although his name is on the mortgage loan. We plan to sell the home in about three years and use the money to build a home in North Carolina as our new residence. Will we have a problem with the home-sale tax exemption if we do not add my husband’s name to the title before selling our home?
• I recall a year or two ago you explained how to clear the title of a deceased co-owner’s name. Now my widowed mother needs to remove her late husband’s name from the title to her home. Can she do that herself or does she need a lawyer?
• I recently sold a rental house I owned near Detroit. As you may know, that area is suffering a real estate depression because many people are moving away and few people are moving in. I felt lucky to get a cash sale for the same price I paid for the house about six years ago. However, my tax adviser says I will owe tax on my sale because I had been claiming depreciation deductions for it as a rental. Is this true?
• I sold my principal residence and moved into my vacation home, which is now my permanent principal residence. However, I go to Florida four weeks each winter. During that time, I rent my home out for a little extra income. When I decide to sell, will that four-week annual rental period prevent me from claiming the house as my principal residence for the $250,000 tax-free exemption?
• I am a new landlord who is receiving conflicting advice. I have been attending the monthly meetings of a local real estate investor’s club where I am learning about property management and having lots of fun meeting fellow landlords. Some tell me I should collect the first and last month’s rent from a new tenant, plus a security deposit. But two old-time landlords told me they collect a big security deposit and the first month’s rent before the tenant moves in. Which is best?
  My mother, who is in her 60s, owns some valuable land, which a developer wants to buy. He offered her an excellent price, but she would be subject to a huge capital gains tax. A friend suggests an installment sale to spread out the tax over perhaps five or more years. But mother’s tax adviser suggests a tax-deferred exchange. Which is best?

Milwaukee Journal Sentinel (Thomas Musil)

• I have been looking into buying a home as a secondary residence. However, some sellers require me to agree to live in the property as a primary residence for a year or two, or else they have the option to buy back the house at the initial purchase price. If home prices go up, they will be more likely to enforce this. Is this a legitimate clause, or something a court would likely strike down?
• We have a neighbor who has a sweetgum tree approximately 15 feet from our blacktopped driveway. The roots from this tree are pushing up and making cracks in the driveway - this has been going on for a long period. Now the branches have grown across our 12-foot driveway and into our tree that is about 4 feet on the other side of the driveway. We are constantly picking up the gum balls and small branches that fall from the tree. Now we cannot even park in our driveway because this tree drops sap and debris on the cars. We tried to talk to our neighbors, but they just got angry with us. Do we have the right to get the branches trimmed back that are over our driveway?
• My wife and I are about to complete the sale of an acre of land for more than $100,000. Last year our gross income was about $130,000. We have one child who will be in her last year of college. We still have nine years left on a 15-year mortgage financed for $84,000 at 6%. We have about four years left on a five-year home equity loan of $40,000 at a fixed rate of 6%. Our concern is what to do with the money from the sale of land. Should we pay off our mortgage on our home and/or the home equity loan? We expect enormous taxes from this sale of land. Is there something we can do to cut down on the taxes?
• We own a vacant lot in a residential neighborhood that we would like to sell on our own. Can you provide any guidance to us or direct us to a reliable resource that would educate us on the basics of selling property in terms of land appraisal, documentation, fees, and general information to complete a sales transaction? There has been one impediment to prospective buyers. The property resides on a hill above other homes that apparently have sewage overflow problems. We would like to sell our lot as ready to be built upon, but our municipality has told us that no additional sewer line taps are being permitted until these sewage flooding problems are re-engineered. Unfortunately, for the past three years the only response we’ve gotten from the municipality on calls for action is that they’re waiting for a “silver bullet” to fix the problem, which we interpret as a chronic “no action” situation. We feel ethically compelled to disclose the sewage situation to prospective buyers, but this inevitably leads to loss of interest in the property. The municipality tells us the flooded homeowners have threatened suit if additional sewer lines are tapped. Do we have any legal recourse ourselves regarding the inability to sell our property due to the municipality’s failure to address the sewage situation? I find it ironic that residents have been notified that our sewage rates will be nearly doubling beginning with the next billing cycle to cover “a significant increase in expenditures . . . and loss of state funded revenue,” yet this situation has continued for years without attention.

Seattle Times (Elizabeth Rhodes)

• I received a notice in the mail from a Washington, D.C., company offering to sell me a certified copy of my home’s deed for $59.50. It says the U.S. government recommends homeowners have a copy. Is this something I should consider?
• My wife and I own a home, and I own part of a small business. If my wife and I were accidentally killed, would the property be transferred to our children automatically? If I’m killed or disabled, would my interest in the business automatically be transferred to my wife?
• We’re planning to rent out our condo. If the rental income doesn’t cover the mortgage, will we still have to pay taxes on the income or is it considered a loss for tax purposes? Also, are there any good resources to help us figure out the correct rent?

MarketWatch (Lew Sichelman)

• About two years ago, I purchased a townhouse for my brother to live in. He lost his home to foreclosure after owning it for 25 years. I have been living with my boyfriend for 20 years and figured it wouldn’t hurt to buy some property. My accountant considered this my home since I don’t own anything else, but it is my brother and sister-in-law who are living there. My brother has paid me rent, but not even close to the amount of the mortgage, association dues, gas, electric and phone utilities that I have been paying. I now have the same situation with my sister who lost her home. I purchased the house from the person who bought the house at foreclosure. My sister hasn’t paid me a cent in rent, but she is paying all of her utilities. No association is involved since it is a single-family house. I pay the mortgage and property taxes. My mortgage broker said that I had to get a loan for this house as an investment property. So far, this is no investment. I have not received any rent and I will need to fix this place up to make it livable for two little girls. Anyway, my question is, how should both of these homes be treated on my taxes? Is anything deductible at this point?
• Your article “Trigger happy” says in the first paragraph “Once the repository receives an order…” Just who is the repository? Basically who provides the applicant’s name to the trigger list?

Miami Herald (Richard White)

• Our condo president has given one director a maintenance job as a subcontractor with pay without approval of the other directors. The director does not have an occupational license or insurance. Our insurance carrier advised the board to terminate the director’s paid duties and cautioned that, if an accident happens, the insurance would not protect the association. If he is hurt, are we vulnerable to a lawsuit? Most of the decisions made by the president have been without the knowledge or consent of the remainder of the board. What can we do legally about this problem? What steps can the majority of the unit owners take in order to recall the president?
• The Florida insurance commissioner’s office says our condo association is responsible for the walls through the wallboard and no finish on the wallboard. Our condominium board says it is responsible to the wallboard. Which is correct? Our insurance agent says damage to a condominium unit from water, etc., from above the unit is the responsibility of the damaged condominium owner unless it is a deliberate act. This does not seem right.

NY Times (Jay Romano)

• Is there a law that says that someone who wants to run for office on a co-op board must give notice before the annual shareholders’ meeting? Recently, at our annual meeting, a shareholder was told she could not run because she did not tell the president before the meeting that she wanted to.
• I am a rent-regulated tenant in a co-op. For the last 20 years or so, the building has negotiated a bulk rate for cable services at prices that are considerably lower than the provider’s retail rates. But three months ago, my cable bill suddenly increased by more than $30 per month. When I called the company, I was told that when the new bulk-rate contract was renewed, the co-op told the cable company to charge rental tenants the retail rate. Can the co-op board do this?

San Francisco Chronicle (Robert Griswold)

• We manage several rental properties and would like to know the language we need to use when we refund the balance of the security deposit to the tenants as a final payment of the refund. Your guidance in this matter will be appreciated.
• I was renting a condo from a woman who lives in Arizona. Each month I mailed the rent check to her home address. She decided to sell the property recently, so I moved out of the condo. It has been more than two months and I still have not received my refund check or an accounting indicating any reason why she was not giving it back. The landlord has since sold the property and she is still living in Arizona. What is the best way to get my rent deposit back?

Washington Times (Henry Savage)

• I have a $275,000 mortgage with a fixed rate of 6 percent. I also have about $35,000 in credit card debt that I used to purchase a time share. Our home is worth at least $400,000. Although I won’t be paying any interest on the credit card debt for another two months, I’m wondering if I should refinance and roll the credit card debt into the loan. Is it wise to eat up home equity to pay off credit cards? Thanks in advance for your comments.

Miami Herald: Richard White

• Our condominium association has very little in reserve funds because past budgets have not included them. The board of directors has adopted a special assessment to increase our reserves. In addition, the board has informed us that we need to replace our roof soon and we will face a special assessment when bids are taken. I have owned my unit less than one year. Other owners have lived here for many years without paying into the reserve fund. Our units are identical, so we all pay the same amount in maintenance fees and assessments. The board tells us we must all pay equal shares of the repairs. It seems fair for the board to require those owners who have avoided paying reserves in the past to now pay a larger share of the cost than those of us who have only recently bought. Can the cost of the repairs be divided according to the length of ownership?
• Many people in my condominium are unhappy with the present board. Five of us would like to run as a slate. Can we run as a slate or do we need to run individually? This is very important to us, since we believe that the current board sidelines important issues in favor of its own agenda.
• We want your advice on a protocol question regarding the annual election meeting for our board of directors. The new board members scheduled the organizational meeting required to establish officers. One of the new directors wishes to relinquish her position only if the elected transfer will go automatically to the next candidate in line according to number of votes. Is this the accepted practice?

San Francisco Chronicle: Robert Griswold

• My husband and I put more than $3,000 worth of renovations into the townhouse we were renting. We put in new hardwood floors, new appliances, paint, a tile backsplash, and many other extras to make this property our home. We were reimbursed for about $1,000 by having it deducted from the rent.  Now we have moved out and our landlord is dragging her feet on returning the security deposit. After all the improvements made to increase the value of the property, aren’t we entitled to our security deposit being returned promptly?
• How long is interior carpet good? Is there a time line for replacement? Does it matter whether the carpet is dangerous or simply old and ugly?
• I am a graduate student living in a one-bedroom apartment and I want to move. I was told I could move as long as I found someone to take over the rest of the lease.  But the landlord no longer allows subletting. What would happen if I sublet without telling the landlord?

NY Times: Jay Romano

• Is the 1 percent “mansion tax” imposed by New York State on a house that costs $1 million or more deductible on the buyer’s federal income tax return?
• Does a co-op board have the right to suddenly limit the weight of the dogs in the building?