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Show REAL ESTATE Standard-Examiner Sunday, March 22, 1992 5D Profits from selling two-family home y1- OPPOSITES ATTRACT. will cost you capital gains taxes th {t- Ior re l1e it- th hio or st 3h tns se 1e ly D[= I- past’ 31 years, own the homeand I’ am over: 70. Some peopletell me I cannot get the $125,000 tax-free profit ‘when I sell as it is a twofamily. Could you please get me the true facts on this? Thank you. — RJ, A. I've answered questionslike yours. many times before, but they keep coming in, so here goes again: The IRS will consider that you have had two sales. One is your own home, the other is income property. Half your profit, up to a me limit of $125, 900, will qualify for ihe special over-55 tax exclusion. ; m The otherhalf of yourprofit represents money you madeselling rentie al property, and will be subject to capital gains tax. DEAR EDITH: My father passed away June 13, 1986 and had several FHA morigages on properties that were paid off when wesold them. He assumed the mortgages from other people. Should we pursue this? — KH. A. If you paid off those FHA mortgages before Nov. 5, 1990, there may or may not be mortgage insurance premium money left over for refund. If it’s available, it would’go to the person who made the final payment. For more information, try the FHA’s (HUD’s) special phone line on the subject: (703) 235-8117. DEAR EDITH: Wesold our home for-a profit. To pay only the income tax legally required, we have three questions: 1.-We were married in 1985. In 1986, my husband sold his home and took the one-time exclusion. Nowwe've sold my home. Can we claim the exclusion as I owned it prior to the marriage? 2. If not, cam we postpone tax on hope for (maybe) is my $20,000 House Calls Edith LankLos Angeles Times Syndicate community. 3. If neither number | or number 2 are allowed, we understand that the amount paid is amortizable over the estimated remaining life of one or the other of the spouses. If true, please let us know the actuarial times permitted. — E. and F.B. A. |. Sorry, butit’s only one toa couple and you’ve used it. I'll bet you know that, and were only hoping there would be some loophole. 2. Sorry, but your replacement residence would have to be actual real estate, with a deed, something you could leave to heirs. 3. Sorry, but you’ve struck out. Surely it wasn’t a lawyer or an accountant who told you that stuff about amortization and actuarial tables? No such tax treatment. Can’t blame you for trying, but no cigars. It soundsas if you'll owe capital gains tax. DEAREDITH: I bought a house with my live-in boyfriend. I contributed $20,000 toward the down payment and my nameis onall the documents as one-half owner. I contributed half toward most of the furnishings. However, my boyfriend pays the mortgage each month. Should I terminate the relation- ship, do I have any rights to part to transfer escrow funds You’re refinancing your home mortgage and the new lender wants you to cough up several thousand dollars to start a new escrow ac- count. But you already have a lot of money tied up in escrow: Can’t the old lender just transfer the account to the new one? Somelenders are willing to transfer the escrow funds to the new er. “Some places will hold on to your escrow money for 30 days,” says Steven J. Kosyla, president of Clover Federal Savings & Loan in Pennsauken, N.J. eet “GIVE US YOUR WORN OUT, =. YOUR BROKEN, = YOUR INOPERABLE. 5 = on the value of the house and the amountofthe loan. DEAR EDITH: Do you have any information in this area of help? Our mortgage is with Chase. They will not excuse our FHA insurance. — KN. A. Neither would any other lend- er. FHA insurance remains with the loan until it is paid off. One consolation: If you have the type of FHA that charges one-half RUSH LIMBAUGH 1GA-1P percent a year, the premium gets smaller each year as the debtis paid down. But the federal government, which insures the loan, requires that the mortgage insurance premium (MIP) be paid right down to the end. You agreed to that when you signed your mortgage pa- pers. This is ali in contrast to private mortgage insurance, or PMI, which can often be dropped when the loan has been paid down far enough. That doesn’t usually hap- pen for many years, though. (Should you put your home in your child’s name? Edith Lank warns of some complicated drawbacks in her leaflet GIVING YOUR HOUSE TO THE KIDS. For a copy, send $1 and a stamped return envelope to KIDS, 240 Hemingway Drive, Rochester, NY 14620. Edith BACK-TO-BACK Exclusively on Lank will also answer personally any letter with a stampedself-addressed envelope.) KALL9IO EMOTIONAL Support: — For the TerminallyIi! Hospice of Northern Utah But some lenders hang on to the moneyfor weeks before they send counts.when a loan is paid off. =. come to your new loan to set up a new es- may have to borrow moneyto set up an account with your new lend- taxeseand homeowner's insurance. would crow account. Different lenders have different policies on refunding escrow ac- crowegrcount to conver property Whether that $20,000, or more, or less, depends ance. That reduces the payoff needed, and leaves money frem a refund check to the borrower. While the lender is collecting interest on your escrow money, you especially if you need a large es- ey Cy CSTe entitled to half the proceeds. lender at settlement. Others apply the money to your mortgage bal- Sure, but that doesn’t mean the lender will. How your lender handles it can have-abig effect on your cash flow, — DL. A. 1m not a lawyer and I haven’t seen your documents. But if your name is on the deed as half-owner, then you are half-owner. You are also responsible for the mortgage. If the place were sold and the mortgage paid off, you’d be profit because we purchaseda replacement residence? It’s a continuing-care retirement community. It’s ours as long as either onelives; after that it reverts back to the somelenders are willing Knight-Ridder Newspapers back. Help! At Associated Business Products, our arms are open to all. =Wé nowoffer repair and maintenanceservice on all copiers eaneluding Panasonic, Konica and Toshiba. Whether you bought Wethinkyou'll like our -month CD rate 4.6”better than the competition. A er ownership? Friends say all! I can ani yn DEAR EDITH: I have a question | cannot:-seem to get straight. I’ve iived in ‘a two-family homefor the :y 1S, “ttfrom us or not, you'll get the best service avaiiable. _.... And our service department guarantees response within 24 hours. Call Associated Business Products at 488-5100 ortoll free within Utah 1-800-669-3030. savings Roe ASSOCIATED BUSINESSPRODUCTS SERVICE THAT CAN'T BE DUPLICATED. SRR Valley Bank 4.00 4.00 4.60 First Security 3.90 4.00 = West One 3.85 4.00 — Zions 4.00 4.10 — First Interstate 3.25 3.75 -- Key peak 4.00 4.00 _ 5 why. Not only does our 7-month Certificate of Deposit Here’s CONSTRUCTION STARTS TOMORROW Construction work begins on Washington Boulevard on March 23. Work will start on the west side of the road, beginningat 7th Street and will proceed north to North Street. Aspart ofthe effort to improve Washington Boulevard, the old pavementwill be removed and the roadway widened. This work requires a lot of excavation. It means lanes will be closed and some ming inconvenience as motorists travel through the construction zone. Please be on the lookout for road construction and slow moving traffic. "As work moves through an area, temporary access points will be provided to allow motorists to get through the work zone and get to businesses. During this first week of construction , access points are being prOVided for Myer’s Mortuary, Golden West Credit Union, and R&R Shoe and Boot Repair. ‘aaucras™ mG. © BETTE offer the best rate in town with a $500 minimum (and $100,000 maximum), it gives you a good, solid return without putting your principal at risk. And our short term won’t tie up your money for a long time. However, our 4.60% is only good through April 30, 1992 and the re is a substantial penalty for early withdrawal. To learn more about our 7-month Certificate of Deposit, call our Ogdenoffice at 621- 7268. our Riverdale office at 621-8652, or visit the Valley Bankoffice nearest you. Thebest rate in town with a $500 minimumdeposit andthe onl) 7-month term in town. Would your bank dothat? ey Bank valle MEMBER FDIC O’A EBE> UTAH DEPARTMENT OF TRANSPORTATION Competitive rates quoted in an independent survey conducted March 4, 1992 |