When selling commercial property look for willing broker, time limit

Q: We are trying to sell a commercial property. May we exclude a potential buyer from any future commission if this person does purchase the property? Is there another agreement we may make as to potential buyers who were on our list prior to hiring a Realtor? -- via e-mail

A: What you ask is not uncommon. You just have to find a willing broker. Your listing contract could say that no commission will be due if the place is sold to Mr. X or Ms. Y. You might want to add "if not sold to them within 30 days" or whatever. That puts X and Y under some pressure to make up their minds, and it allows your agent to contact them later if they are hesitating.

The agent's work, of course, involves a lot more than just finding someone who wants to buy your property.

You might want to promise a reduced commission if X or Y buys so that your agent will provide all the additional services that go into bringing about a successful closing.

Then you just need to find an agent who agrees with such an arrangement. Many will.

Lease After Foreclosure

Q: If a lease remains in effect after a sale, why doesn't it after a foreclosure? -- S.W.

A: When property is transferred in an ordinary sale or gift, any legal claims against it remain in effect. That includes things such as unpaid mortgages, easements, mechanic's liens for unpaid work, back taxes and, yes, leases. The new owner takes them along with the property.

That's why it's important for buyers to have the title searched before handing over money, to make sure they aren't buying problems, unexpected debts or other complications.

A foreclosure, on the other hand, wipes out most other "junior" claims, though this can vary from one state to another. In many places, only unpaid taxes (IRS claims or property taxes) would remain against the property after it was sold at foreclosure. So there goes the tenant's lease.

Deducting On Two Homes

Q: We have just purchased a condo and will be moving in late September. If our home doesn't sell by then, we will be paying real estate taxes on both properties. Would we be able to deduct both taxes on our 1040 income tax form? We will be living in the condo and not be renting the home. -- E.D.

A: Taxpayers who itemize can deduct any property taxes they pay on all real estate they own.

Refinancing For Cash

Q: Let's say you buy a house under the appraised value. Is there a waiting period before you can refinance that house to recoup the equity? -- via e-mail

A: I'm not sure "recoup" is the right word because it doesn't sound as if you'd want to get something back that you'd spent. But if you were hoping to refinance for a higher amount and come out with cash in your pocket, one problem might be your current mortgage would have a penalty for too-early payoff.

There'd be no other time limit. But there's also the chance that the next lender's appraiser might not give you the same high estimate another time. Remember: Assuming this worked, you might come out with cash, but it'd be borrowed money.

You'd be paying more interest on a larger debt, and have the expense of a new set of closing costs as well. And, of course, a lot would depend on your proposed new interest rate compared with the one you had originally.

Gain Or Loss

Q: I am confused about if I have a gain or loss on the sale of a home.

My wife and I bought a house a year and a half ago. We paid $273,000 for it with $123,000 down.

We got a loan of $150,000. We would like to sell now for $280,000 and still owe $148,000.

With the sale commission and closing costs, etc., would we have a gain or loss not for capital gains but for overall transaction results? -- J.Q.

A: The mortgage doesn't figure into your calculations.

You weren't taxed on that money when you borrowed it, and you'll be repaying it when you sell. The IRS isn't interested, except, of course, as you could deduct interest paid every year.

Subtract from the sale price your original cost, anything you've spent on permanent improvements, real estate commissions and the legal costs of buying and selling.

It looks as if you won't have any actual profit or any taxable capital gain. If you lose money on the sale of your own home, by the way, you are not allowed to deduct it as a capital loss. Doesn't sound fair, but there it is.

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.