All property taxes on land can be deducted from federal return

Q: I recently inherited some land from my mother. Parts are zoned residential and never improved, but one tract is commercial. It had a building that was torn down years ago. Will any of the property taxes be deductible on my income taxes?

— email

A: All property taxes that you pay on any land you own are deductible on your federal return, assuming you itemize. You might as well check this out with a CPA, since I suspect you’ll want your own accountant now that you’re a landowner.

How could payment increase

Q: My niece and her husband bought a house. Two years later, they rented it out and moved away. My niece says the mortgage company raised the payment by $75. She couldn’t tell me more because her mother-in-law took care of everything. I thought a mortgage is set once it is locked in. What could have happened?

— email

A: Your niece may have an adjustable-rate loan that includes a new interest rate a bit higher than her old one.

On the other hand, if she has a fixed-rate mortgage, monthly payments for principal and interest do stay the same every month. But the lender might also collect extra money, which is held in an escrow or reserve account. That’s used to pay her property tax and homeowner’s insurance bills. If her taxes went up $900 a year, the lender would collect an extra $75 monthly, so there would be enough in the account to pay the next bill.

Or, it’s just possible that she has a special homebuyer’s mortgage, perhaps offered by her state, with some advantage that doesn’t apply if the house is no longer her residence.

Reverse mortgage can be useful

Q: I was intrigued by the article in your column about a reverse mortgage for a 72-year-old woman. It does seem to address her present financial needs, but how would future needs be met once she moves into a nursing home, for example?

Also, is this different with an assisted-living facility? Do you have any recommendations on the best person to contact for that type of information?

— B.

A: A reverse mortgage is an excellent solution for an older homeowner who wants to remain in the house but needs more income. It allows for borrowing against the equity in the home with no repayment due as long as the owner lives there.

For health care information, consult a lawyer who specializes in elder law.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope). Or readers may contact her at www.askedith.com or edithlank@aol.com.

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