Refurbishment can be essential step for selling home in current market

Q: Where or how can I purchase your book, "The Homeseller's Guide"? We are planning on listing our home for sale this spring or summer, and would like some tips on sprucing it up beforehand. -- L.D.V., Hamlin, N.Y.

A: That book is out of print, but you'll find the chapters you're looking for on my Web site, askedith.com.

Many things that cost little or nothing can make a big difference in how readily your home sells. You don't want to hide any defects, but there's nothing wrong with giving the place the kind of doll-up you'd give a used car.

In the kitchen, for example, the first step is to stow away three-quarters of the items that usually live on your kitchen counters, so everything looks more spacious.

If you want to spend a bit, dress up your cupboards with modern knobs.

Remove most of the cherished family items that express your personality -- you want buyers to picture their own life there, not yours.

Then, because looking at other people's bathrooms can be unappealing, make it as easy as possible. Take a good look at your shower curtain; a stained one can be replaced with an inexpensive sparkling one in a solid neutral color (no mermaids or seashells). Replace a chipped toilet seat. Bring in a potted plant.

Tuck away personal items like toothbrushes and combs. Check grout around the tub and shower. Remove tub mats. Buy a set of solid-color towels to be set out last minute before the house is shown, and don't let the family use them.

You'll be cleaning out your medicine chest when you leave, so you might as well do it beforehand; the inside might benefit from a quick touch-up paint job.

You'll find similar advice for the rest of the house on the Web site. Good luck to you.

Grandson, wife caught

in mortgage fraud

Q: My grandson and his wife have a real estate attorney friend helping them concerning the house and acreage they bought. He wrote the IRS because they received a 1099 saying they had $24,250 income as forgiveness of a debt.

They were first-time buyers and were paying $123,500 for the property. Unfortunately they weren't able to qualify for enough loans, so the mortgage broker and the developer increased the purchase price to $151,000 so it looked like they had a down payment. Then the extra mortgage money was shared between the broker and the seller. My grandson didn't know there was anything wrong about it.

I don't know what happened after that, but they received this notice that they owe tax on $24,250 that they borrowed and never paid back. Is this fair? -- N.M.

A: It's too bad your kids didn't consult their attorney friend a bit earlier. He could have alerted them that lying to a bank constitutes fraud and is usually a felony. I'd be interested in hearing whether the IRS takes pity on them or blames them. Do let us know what happens to everyone concerned.

Two-family home

entails capital gains

Q: I bought a two-family home in March 1997. I occupied one half and rented out the other half. Then in August 2005, I moved out and rented the whole house until I sold it 17 months later.

I am wondering how the capital gains tax will affect me. Do I pay full capital gains because it was a rental property? Do I pay half because I lived in one half? Or could I be so lucky as to not have to pay because the home was my primary residence and sold for well under $500,000? -- B.M., via e-mail

A: Nice try, but no cigar. The IRS will treat your sale as two transactions, each with half your profit. For the unit that was rented out, you will owe tax at favorable long-term rates, no more than 15 percent federal, except that any portion of your capital gain attributable to depreciation is taxed at 25 percent.

On the half of the gain that represented your own home, you qualify for the single taxpayer's tax-free profit of up to $250,000.

That's because you owned and occupied that unit as your principal residence for more than the required two of the five years before you sold. But again, any depreciation you charged as an expense while that unit was later rented must be "recaptured."

Better put the whole thing in the hands of a CPA or enrolled agent who can handle the complications.

Edith Lank will personally respond to any questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.