DEAR BOB: I take care of my 85-year-old widowed neighbor. She has no family other than a nephew she has never met who lives in Europe. She has willed her home to him. I told her I would like to buy the house from her now and he can inherit the money instead. The home is about 40 years old and in original condition. I would let her live her life there and I would manage the property. What is the best way to handle this and how can I avoid taxes? Or is it better if she wills the property to me and I pay the nephew at the time of death? –Karen C.
DEAR KAREN: If you buy the house now before your neighbor dies, it is not a taxable situation for you. But it might be a taxable situation for her if she has more than a $250,000 capital gain.
Purchase Bob Bruss reports online.
Of course, you can buy the house now and give the widow a life estate so she can remain living in it for her lifetime.
If the widow leaves the house to you in her will, that might be prohibited if your state has a law barring willing assets to a caregiver (California has such a law). Please consult a real estate or tax attorney for further details.
NO RIGHT TO DEPOSIT REFUND WHEN CANCELLING PURCHASE CONTRACT
DEAR BOB: A few months ago, I contracted to buy a new condominium. It was to be an investment. The condo is being built and will be completed in October. However, due to issues beyond my control, my financial situation took a downward turn. Now I don’t believe I can afford the condo. My husband developed prostate cancer and has gotten treatment. But he lost his job. We are separated so his job loss means drastically reduced child-support payments. I had included those payments in my expected income when I contracted to buy the condo. Since my income is drastically reduced, I want to get out of the purchase contract and get my $19,000 deposit back. The developer says “no.” –Phyllis R.
DEAR PHYLLIS: Explain the situation to the developer, clearly stating why you can no longer qualify for mortgage financing due to circumstances beyond your control.
The terms of the purchase contract will determine if you are entitled to refund of your $19,000 deposit. Possibly, you might owe breach-of-contract damages to the developer. Ask a local real estate attorney to review your contract to determine your rights and obligations.
APPRAISAL IS BEST WAY TO DETERMINE VALUE, APPRAISER SAYS
DEAR BOB: I am sick of your constant advice for home sellers to interview three or more real estate agents when determining the sales market value of their homes. As a longtime professional appraiser, I suggest home sellers would be better off obtaining a professional appraisal so they won’t be misled by a realty agent trying to get the listing by estimating a high sales price. Appraisers have access to the recorded sales of similar nearby homes and are in the best position to determine a home’s market value. –Walter S.
DEAR WALTER: Sorry, we will have to agree to disagree. When selling a home, the individuals in the best position to accurately estimate a home’s likely sales price are local real estate agents. They are out in the sales trenches every day. But appraisers look at recorded sales prices, which do not indicate up-to-date sales price trends, up or down.
In other words, real estate agents are in the best position to advise home sellers the likely sales price of their residence. My experience with appraisers is they look at recent sales prices of comparable nearby homes whereas realty agents use that information plus their everyday sales experience to determine a home’s likely sale price.
The new Robert Bruss special report, “Pros and Cons of Investing in Rental Houses and Condominiums,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 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).