DEAR BOB: What is your reasoning for not paying all cash for a property if the buyer has the funds and wants to cut down on monthly expenses? –Renee DeC.
DEAR RENEE: If you buy a “bad house” or a “bad condo” for 100 percent cash, you are the “stuckee” who might not be able to sell that property except to another all-cash buyer.
Purchase Bob Bruss reports online.
However, if you buy for a modest down payment of 20 percent to 25 percent cash, and obtain an 80 percent or 75 percent mortgage, you won’t have a large amount of cash tied up in one property.
Of course, if you are independently wealthy and you will never need to see the cash you pay again, be my guest and take the risk of tying up that cash in a bad property.
TWO-FAMILY DUPLEX SALE CAN QUALIFY FOR TWO TAX BREAKS
DEAR BOB: I own a house with a rental unit. I am selling this property and buying another house with a rental unit. Does the rental-unit sale qualify for a tax-deferred exchange? –Ellen F.
DEAR ELLEN: Yes. Sale of the rental unit can qualify for an Internal Revenue Code 1031 tax-deferred exchange if you meet the easy requirements. They are trading equal or up in price and equity, not having “constructive receipt” of the sales proceeds, having them held by a qualified third-party intermediary beyond your control, designating the replacement property within 45 days after the sale, and completing the acquisition within 180 days.
If you own and occupy the house as your principal residence, its sale can qualify for an Internal Revenue Code 121 tax exemption up to $250,000 for a single home seller or up to $500,000 for a married couple filing a joint tax return. To qualify, you must have owned and occupied your principal residence at least 24 of the last 60 months before the sale. For full details, please consult your tax adviser.
CAN HOMEOWNER ENTER NEIGHBOR’S LOT TO CUT TREE ROOTS?
DEAR BOB: Roots from five trees on my neighbor’s property have damaged a wall bordering our house. He refuses to remove the trees or repair the wall. A lawsuit will likely be in my favor so I can repair the wall. Can he refuse entry on his property to remove the tree roots and the trees? What recourse do I have? –William D.
DEAR WILLIAM: Unless you have a court order (called an injunction) allowing you to enter your neighbor’s property, the neighbor can refuse to allow you to enter his land to cut the tree roots that are damaging the fence.
If you file a lawsuit, be sure to ask the judge for a court order (injunction) allowing you or your workers to enter the neighbor’s property to cut the tree roots that are damaging the fence. For full details, please consult a local real estate attorney.
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.
(For more information on Bob Bruss publications, visit his
Real Estate Center).