DEAR BOB: My husband and I have a little realty problem. Can we obtain an equity loan on our four-unit apartment property and will the interest be tax-deductible? We want to use the money to improve the property. But our community bank, where we’ve banked at least 10 years, refused our request although we have great credit and keep substantial deposits – Kim W.
DEAR KIM: Dump that bad bank. If you have great credit and have kept substantial deposits for more than 10 years, your bank should roll out the red carpet for you.
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Presuming you have adequate equity in your small apartment building, you should have no trouble obtaining a second mortgage to pay for improvements. When you obtain an equity loan – known as a second mortgage – on your apartments, the interest becomes tax deductible as an ordinary and necessary business expense. For more details, please consult your tax adviser.
HOW SOON CAN $500,000 TAX EXEMPTION BE USED AGAIN?
DEAR BOB: We recently sold our Massachusetts home and plan to use that $500,000 principal-residence-sale tax exemption. How soon can we use that tax break again if we decide to sell our Florida home? – John R.
DEAR JOHN: Presuming your Florida home has now become your principal residence, you must wait to again use the Internal Revenue Code 121 tax exemption until at least 24 months after your prior principal-residence sale. For full details, please consult your tax adviser.
WHAT IF EX-HUSBAND REFUSES TO REFINANCE MORTGAGE?
DEAR BOB: I was divorced three years ago. My husband got the house. My lawyer said my ex-husband had to refinance to get my name off the mortgage. We do not speak to each other. But his mortgage information is still listed on my credit reports. Can he sell the house if my name is still listed as a part owner? If he dies, can he bequeath the house to someone else? – Barbara V.
DEAR BARBARA: Unless your name was removed from the house title as part of the divorce agreement, you still co-own part of that house.
As for the mortgage, as a co-signer your name remains on the mortgage until your ex-husband either refinances or sells the property. However, if your name is still on the title, your signature is required to convey marketable title.
At this point, you can’t force your ex-husband to either refinance the mortgage or sell the house. For full details, please consult your divorce attorney.
The new Robert Bruss special report, “The Whole Truth About Reverse Mortgages for Senior Citizen Homeowners,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.
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