Seller still can show house in case current deal falls through unexpectedly

Q: If I have an accepted contract on a house and I have an approved mortgage from the bank, can the agent still show the house? We are buying the house "as is" and are concerned about further damage. -- via e-mail

A: Your contract stands; no one can come in and upset it. But you don't own the house yet, and the sellers still control it. They simply may be looking for a backup offer in case something goes wrong with your deal, and their agent has a duty to obey their wishes.

If you're worried about damage, take some pictures and have a last-minute walk-through just before closing. You have the right to receive the property as it was when you made your offer.

Renter can still check

into refinancing property

Q: I rent out my condo in Florida and live with my folks up North. I want to refinance my condo, but the mortgage lender said I have to live in it to get the loan. What can I do? The condo is my only home. -- via e-mail

A: The condo is the only real estate you own. Your home is up North.

It's true that mortgage money is becoming harder to get, but it's worth talking with mortgage brokers in Florida about available loans for rental property.

Gifts to son after home

sale is restricted by limits

Q: We want to sell our house and help our son buy a home. Our intention is to live together, as we are retired. Can we give him the proceeds from the sale without concerns about taxes? -- D. and J.P.

A: Each of you can give your son $12,000 a year with no federal gift tax consequences. If he is married, you could give the same to his wife. That could make $48,000 each year. If you gave them $48,000 at Christmas and another $48,000 at the beginning of 2008, that would total $96,000 with no federal tax consequences. Any amount beyond that still could pass tax-free, as long as it's less than the lifetime limit of $1 million from each of you. Beyond that, any more simply would come off what you could leave tax-free at your deaths, currently $2 million each.

As I don't know your whole situation or your son's, I can't judge whether this is a wise or a foolish move. I strongly recommend you consult a lawyer who specializes in estate planning before doing anything.

Nonmarried couple should

consult lawyer before purchase

Q: My girlfriend and I are buying a home with her money. We each will be 50 percent owners of the house. There will be no mortgage, as the purchase will be funded entirely by her cash assets. Will I have any income tax or other tax liabilities that I should be aware of, and if so, how should the purchase be structured or what type of legal entity should be set up to limit or eliminate any current or future tax burden? -- J.

A: I think the wrong person is asking for my advice here. And taxes may be the least of the problems.

When unmarried persons buy together, it's important to go to a lawyer together and draw up an agreement that answers all sorts of "what-ifs" about complications that might arise in the future. Sort of a non-nup prenup.

I'm not going to try answering your questions. I would advise strongly that you two -- and particularly the one who's putting up the money -- discuss the whole situation with an attorney. Explain what goals you're aiming for, and decide in advance what should be done about problems that can show up later. The lawyer is the one with whom you should discuss your tax questions and some other matters that may not have occurred to either of you.

Desperate landlords can

be taxed on sale of rental

Q: My husband and I bought a house in 2002. In January 2006, we moved and rented out the home. We now have it on the market, desperate to get out of the landlord situation. We stand to make a profit. Will we be taxed on it? -- via e-mail

A: As you learned, landlording is a job, and trying to do it absentee is asking for trouble.

To use the home seller's exclusion, you must have owned and occupied the place as your main residence for at least two of the five years before you sell. Sounds as if you could take up to half a million dollars in tax-free profit if you sell before January 2009. You will have to pay depreciation you claimed or could have claimed while the property was rented, but that should not amount to much. I suggest you get professional help with your tax return after you sell.

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.