DEAR BOB: I have owned my condominium since March 31, 2005. But I am interested in relocating in the next few months for career purposes. Someone told me I might be exempt from capital gains tax on the sale of my condo — although I have not lived in it for 24 months — if I sell for career or educational purposes. Is this true? –Annmarie S.
DEAR ANNMARIE: If you sell your principal residence due to a job location change that qualifies for the moving-expense tax deduction, you may be eligible for a partial Internal Revenue Code 121 $250,000 exemption based on the number of months of primary-residence ownership and occupancy.
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However, moving for “educational purposes” clearly does not qualify unless you obtain a new job where you attend school. For full details, please consult your tax adviser.
WHAT TO EXPECT WHEN MAKING FINAL MORTGAGE PAYMENT
DEAR BOB: We bought our home 18 years ago with the seller carrying back the mortgage. We faithfully made on-time payments every month. This December we will make our final mortgage payment. What do we need from the owner for final title clearance to the property? –Susan H.
DEAR SUSAN: Congratulations on making your final payment after 18 years of home ownership. Not many mortgages last that long because they usually get refinanced or the home is sold.
If a mortgage was recorded against your title, when you make the final payment your seller-lender should provide you with a Satisfaction of Mortgage in recordable form so you can clear your title of the mortgage security.
If the security instrument was a recorded deed of trust, the lender should instruct the trustee to provide a Deed of Reconveyance in recordable form, which you can record to clear the deed of trust from your title.
The seller-lender should also return your promissory note marked “paid in full.”
Because most individual lenders don’t know what to do when the final payment is made, you may have to “guide” your seller-lender to take care of the details properly. For more details, please consult a local real estate attorney.
BUYER’S HOMEOWNER INSURANCE DOESN’T PROTECT SELLERS
DEAR BOB: I just sold my house and purchased the most expensive homeowner’s insurance policy for the buyer. My house is almost 6,000 square feet, with many amenities. If anything goes wrong, such as appliances, roof, sinks or showers, can the new owner sue me? My sister and brother-in-law sold their home “as is” and the buyer had a leak in the garage roof six months later during a heavy rain. They took my sister and brother-in-law to Small Claims Court and won. We know there are no leaks in our house. What can we do to avoid liability to our buyers? –Joey L.
DEAR JOEY: I am very puzzled why you would pay for your buyer’s homeowner insurance policy. That expense should be paid by the buyer. That policy won’t protect you after the home sale if you failed to disclose in writing to the buyers all known defects in the residence.
Your legal obligation at the time of the sale is to provide a written disclosure of all known home defects. If a defect later materializes, such as a roof leak, it is then up to the buyer to prove you knew of the undisclosed defect but failed to reveal it. For more details, please consult a local real estate attorney.
The new Robert Bruss special report, “Five Easy Ways to Buy Your Home and Investment Property for Nothing Down,” 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 delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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