DEAR BOB: I would like to make a home purchase offer with a 15-year mortgage, a 20 percent cash down payment, and a 5 percent interest rate. After the home seller accepts my offer, suppose the bank approves my mortgage at terms other than what I specified. Can I back out of the purchase contract or do I have to accept the offered interest rate? – Ray X.

DEAR RAY: Yes, you can make your home-purchase offer contingent upon obtaining a mortgage at the terms you specify in the offer.

Purchase Bob Bruss reports online.

However, if you make a good-faith effort by applying with several mortgage lenders and cannot obtain the specified mortgage terms, then you can either accept the best available terms or show the seller the contingency can’t be met and get your earnest money deposit refunded.

But a better tactic before shopping for a home is to first get pre-approved in writing by a mortgage lender. Then you will know the mortgage terms available, contingent on the home appraising for the purchase price you offered and the seller accepted.


DEAR BOB: We recently sold a rental house. I wonder (1) do we owe full capital gains tax on the difference between our purchase and selling prices, and (2) can we deduct our capital improvements and the sales commissions paid? – Sharron M.

DEAR SHARRON: Unless you made an Internal Revenue Code 1031 tax-deferred exchange of the rental residence for another rental property of equal or greater cost and equity, your capital gain is taxable.

The capital gain on the sale is the difference between the property’s “adjusted sales price” and its “adjusted cost basis.”

Adjusted sales price is the net sales price. That means gross sales price, minus expenses such as the sales commission, transfer tax and other sales costs.

Adjusted cost basis is the purchase price, plus capital improvements added during ownership, minus depreciation and casualty losses deducted during ownership. In other words, the capital improvements are an addition to your original purchase price. For full details, please consult your personal tax adviser.


DEAR BOB: I just purchased a new rental house. I am tracking all the expenses and plan to depreciate the house. What accounting forms do I need? Should I set up a LLC? – Michael F.

DEAR MICHAEL: You have a very simple rental house situation. Get a copy of income tax return Schedule E to see what expenses you can deduct for your rental house. This is the same form where you will report rental income.

If you own just one rental property, it might be a waste of time to create a LLC (limited liability company) because the costs for LLCs can be quite expensive. Of course, be sure to carry adequate liability insurance to avoid potential negligence losses.

The new Robert Bruss special report, “How to Earn Up to $250,000 (or More) Tax-Free Profits Every 24-Months Buying and Selling Homes,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center


What’s your opinion? Send your Letter to the Editor to

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription