DEAR BOB: We got ripped off when buying our first home last November. Our first mistake was letting the listing agent act as a “dual agent” to represent both the seller and buyer. Our second mistake was trusting her, as she turned out to be a real crook. Imagine our surprise, after the closing, when we got the keys to our new home and discovered the sellers had removed all the light fixtures (leaving bare wires in the ceiling). They took even the built-in dishwasher, cook-top range and built-in oven. We understand they were entitled to remove the refrigerator, washer and dryer, which were freestanding. The realty agent says there was nothing said in the sales contract so the sellers presumed we didn’t want the nice light fixtures, especially the dining-room chandelier. What recourse do we have, as the sellers moved out of state? –Brett R.
DEAR BRETT: That was a very bad home sales contract if it didn’t specify that the fixtures are included in the sales price. It’s not necessary to itemize fixtures because they are personal property, which by means of permanent attachment became part of the real property.
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Didn’t you have a “walk through inspection” the day before the schedule sale closing? Every good real estate agent encourages such an inspection to be certain the seller has left the home in the agreed condition so there won’t be any later surprises. Shame on that realty agent for not arranging such a walk-through inspection, which would have prevented the problem you describe.
At this point, I suggest you contact the realty agent’s office manager, politely explain the problem, and ask for compensation for your estimated replacement cost of the fixtures, including the built-in appliances.
Because the sellers moved out of state, it will be extremely difficult to sue them so your best leverage is over the realty agent who allowed this problem to be created. If necessary, your recourse is a lawsuit against the realty agent and the sellers. For details, please consult a local real estate attorney.
CAPITAL GAIN, NOT SALES PRICE, DETERMINES HOME-SALE TAX EXEMPTION
DEAR BOB: I plan to sell my home in the next few months. I have owned and lived in it about 10 years. The sales price should be around $325,000. I paid about $100,000 and I have added some improvements. My mortgage is around $62,500. A friend told me I will owe tax on the amount exceeding $250,000. Is this true? –Marcia C.
DEAR MARCIA: No. Internal Revenue Code 121 provides up to $250,000 tax-free principal-residence-sale capital gains profits for a single home seller (up to $500,000 for a married couple filing jointly where both spouses qualify).
To qualify, you must have owned and occupied your principal residence at least 24 of the last 60 months before its sale. It appears you qualify.
Your adjusted cost basis for your home is its $100,000 purchase price, plus the cost of capital improvements you added. The mortgage balance doesn’t matter. Subtracting $100,000 from the estimated $325,000 adjusted sales price is a $225,000 capital gain. That is well below the $250,000 exemption so it appears your entire principal-residence sale profit will be tax-free. For details, please consult your tax adviser.
ZERO-LOT-LINE HOUSE CAUSES UNUSUAL PROBLEM
DEAR BOB: My mother-in-law lives in a zero-lot-line single-family house where the windowless left side of her home sits on the property line with her neighbor on that side. This neighbor refuses to properly landscape her back yard. The result, when it rains, is water stands against my mother-in-law’s exterior house wall. This water seeps into her home and is causing interior damage. What can she do? –Rick T.
DEAR RICK: That is a very unusual situation. It appears the neighbor is maintaining a “private nuisance” that affects your mother-in-law’s house. I presume she has tried to work out a friendly solution with the neighbor.
At this point, legal action is probably necessary to abate this private nuisance. She should consult a local real estate attorney for further information.
The new Robert Bruss special report, “The 10 Key Questions Smart Home Buyers Ask to Avoid Getting Ripped Off,” 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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