Inman

Does lease-option require renter to pay for repairs?

DEAR BOB: Someone is buying my home on a rent-with-option-to-buy condition. She will forfeit $30,000 if she does not go through with the purchase at the end of the lease. I am asking her to pay the property tax and insurance while leasing. Can I also ask her to take care of any repairs while she leases? – Maria F.

DEAR MARIA: Yes, you can ask whatever you want. Whether the tenant-buyer will agree to pay the repair costs during the lease-option period is up to her to decide.

Purchase Bob Bruss reports online.

What if the roof starts leaking? Would it be fair to ask your lease-option tenant to pay for an entire new roof?

As a frequent user of lease-options, both as a buyer and seller, only once as a buyer have I agreed to pay for the seller’s repairs. That was a 15-year lease-option at a fixed purchase price so I didn’t mind paying all the expenses. As it turned out, I had to install a new roof. But the situation was such a bargain, I still had a good deal.

VACATION HOMES DON’T QUALIFY FOR TAX BREAKS

DEAR BOB: We own a vacation home, which has greatly appreciated in market value. This year we only used it about six weeks total. As we are getting on in age, we are thinking of selling. But our profit will be around $350,000. How can we avoid paying tax on this profit? – Edward R.

DEAR EDWARD: Based on your facts, you can’t avoid capital gains tax. Part-time vacation homes qualify for neither the Internal Revenue Code 121 principal residence sale $250,000 exemption nor the Internal Revenue Code 1031 tax-deferred exchange.

However, before selling, you could convert your vacation property into either (1) your full-time principal residence for at least 24 of the 60 months before its sale to qualify for the $250,000 exemption ($500,000 for a qualified married couple filing jointly), or (2) a rental property qualified for an IRC 1031 tax-deferred exchange. For details, please consult your tax adviser.

HIRE YOUR OWN BUYER’S AGENT TO PREVENT OFFER SHOPPING

DEAR BOB: We are first-time home buyers. Several weeks ago, we made a written purchase offer through the home’s listing agent. She seemed very helpful as she prepared our purchase offer. As novices, we didn’t question her when she said, “It’s standard to make purchase offers good for a week.” So we agreed. During that week, we waited to hear from the listing agent. After waiting eight days, I phoned her. She said, “I’m sorry, but yesterday a better offer was accepted by the seller.” Should we sue her for not representing us properly? – Niam R.

DEAR NIAM: No. Don’t waste your time dealing with that dishonest listing agent who breached her fiduciary duty to you. But we can all learn from your sad situation.

Your first mistake was not having your own buyer’s agent representing you. It does not cost a buyer anything extra to have your own agent because the two agents will split the sales commission.

A buyer’s agent would have made your purchase offer valid for not longer than 24 hours. This prevents “offer shopping” which is obviously what happened.

Your second mistake was making your purchase offer valid for a week. The listing agent clearly intended to shop your offer for a week and, only if a better offer could not be obtained, recommend the seller accept your offer.

The new Robert Bruss special report, “How to Earn Up to $250,000 (or more) Tax-Free Profits Every 24 Months Buying and Selling Houses,” 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 www.bobbruss.com. 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 opinion@inman.com.