Experts can advise about capital gains taxes, selling, transferring title

Q: Are we required to pay 28 percent capital gains taxes on a house we are selling?

The house was signed over to my wife and me in 2004 from my mother who is in a nursing home. The tax laws are so confusing that I am having trouble trying to decipher the answer. Please point me in the right direction. -- D.P.W.

A: I'm assuming you don't live in the house. But did your mother retain life tenancy? Has the place been rented out since 2004? Did ownership change when your father died? All that might make a difference.

My guess is that you will indeed owe capital gains tax on your profit -- at less than 28 percent, by the way. That profit will be figured from your mother's cost basis for the house. You could use help from a CPA, enrolled agent or tax attorney.

Selling to daughter

Q: We want to sell our previous residence to our daughter who is currently living in it. We need to know the steps to complete this immediately. -- E-mail

A: How is your daughter going to pay for the property?

If you have a Federal Housing Authority or Veteran's Administration mortgage and she can qualify financially, she could take it over. Otherwise, your loan, if you have one, must be paid off. The lender that finds out there's been a change of ownership (through her insurance policy if nowhere else) could declare your loan all due and payable immediately.

If you have no mortgage, it gets easier. Unless she's paying you all cash, though, or you're making her a gift or taking back a mortgage, she'll need her own loan. To apply for one, she can contact a mortgage broker.

Then you'll need a lawyer or a real estate broker to draw up a sales agreement.

You might want to hire a broker, perhaps by the hour, to guide you through the rest of the procedure.

Or you can contact whoever usually handles closings in your area.

Depending on local custom, that might mean a real estate attorney, title company or escrow company.

Can't find a tenant

Q: We have a property that we had hoped would be an investment, but we have not been able to find a tenant.

After nine months of it being vacant, we are at a loss. The management company has not been able to fill the house and we're very frustrated with them. Do we find another management company or do we just sell? -- e-mail

A: I don't know your real estate market. Maybe everything in town is standing empty. But if other places are being rented, my guess is that you've set the rent too high.

After all, if you offered the place for $10 a month, you'd have your pick of tenants. And somewhere between $10 and what you're asking is the right level to attract interest.

Is your management company paid by a percentage of the rent you'd collect? If so, it's hard to think they aren't doing everything they can to find a good tenant. I don't think changing to another company would make much difference.

Lease option

Q: I have a lease with the option to buy. I paid $3,500 for the past nine months with $1,000 to be used as the down payment.

It was understood that if I didn't buy, I would get that money back. Now that I am not able to purchase, she is not willing to give me the money owed.

What is my recourse? -- e-mail

A: I hope that understanding was in written form. At any rate, small claims court is an inexpensive way to get a judge's opinion.

Giving to son

Q: My son lives in a condo I have owned (no mortgage) for many years. He has been paying all costs involved.

I'd like to transfer ownership in the simplest and least costly way possible, but I am concerned about tax consequences.

Can we complete the transaction without having to pay for an attorney's assistance? -- K.

A: Transferring ownership, particularly of property that is not mortgaged, is a straightforward matter. A lawyer won't charge much for the relatively simple paperwork.

Doing it right in the first place can head off problems in the future.

You may have to file a gift tax return, but unless the condo is worth much more than $1 million dollars, there shouldn't be any actual tax to pay. Your attorney can explain the way gift and estate taxes are related.

Bidding on two properties

Q: Two properties for sale. Can I bid on both properties at the same time? Can I pursue the first one that accepts my bid, and at same time walk away from the other with no consequences?-- R.J.

A: If your offers are in writing, and if they are accepted in writing before you have time to withdraw either one, you could be in trouble. You'd be obligated on two binding contracts.

Losing an earnest money deposit could be the least of your problems.

Tax-deferred exchange

Q: We own a vacation home and are considering selling it to purchase another vacation home on a different lake. We have used the property exclusively for our own enjoyment and it has never been rented out. Our son suggested that we look into a Like-Kind Exchange.

Are vacation homes eligible for this kind of treatment? If so, what IRS publication would be helpful? -- e-mail

A: You can look up Section 1031 tax-deferred exchanges on the Internet, but I'm afraid you'll find they're only for investment property.

No action in a year

Q: I have had my home on the market for well over a year and my real estate agent has not show it once. Is this normal? -- S.

A: Of course not, and you may have a legitimate complaint against your agent. If you're not being urged to drop your price, you're not being well served.

If your house has been entered in a multiple-listing system, many agents know about it and could be bringing customers. But they can't drag prospective buyers by the hair into an overpriced house.

My guess is that the buying public has voted that your place is not worth anything near what you're asking.

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 e-mail her at ehlank@aol.com.