DEAR BENNY: My 79-year-old mother has lived in her place for more than 13 years. She has never had any problems until the neighbor above installed wood floors. The condo had no rules in place for approval of this, but after we complained it adopted certain rules, with no grandfather clause. Can we have the neighbor now remove the floors?
My mother’s unit has become an echo chamber. It was bought virtually soundproof and now it is not. We believe the condo was not built to have wood floors, ever. Who knows what lies under the flooring? Obviously not anything for noise control.
The other issue is the upstairs neighbor’s oversize dog is caged all day until the evening and on the weekends. We have filed police reports about the noise. The dog whines and thrashes in his cage at all hours, especially on the weekends at 1 a.m. and later. When the neighbor comes home, he lets the dog out. By this time, my mom has had no sleep and is up the rest of the day.
The new rules for the flooring require anyone putting in floors to get board approval. The dog issue now requires a complaint form, but that is our word against his. The only way to get any proof is to have the police come at this late hour and we at least will have proof. But can we get him to get rid of the dog?
The new rule states after three complaints of noise or breaking of a rule the offender has to comply. He is adamant about not giving up that dog. All would be fine if he got rid of the floor. How can we get help for my mom? Do we have any agency that could help? Her health is ailing from this. –Terry
DEAR TERRY: In my opinion, you don’t have to rely on the new rules that your association adopted. Even though there is no grandfather clause, the upstairs neighbor may take the position that the rules do not apply to him because his floors were already in place before issuance of the new rules.
I am sure, however, that your association documents prohibit excessive noise. You should contact your association and demand that it investigates both the noise and the dog issue.
If the association refuses, your only recourse may be to file suit.
As for the dog, however, I do recommend that your mother call the police every time the dog causes a disturbance. If the police are called too many times, they may be able to assist you in getting your association to take action.
DEAR BENNY: I have heard that there is going to be a 3 percent tax on real estate sold in the U.S., which will be applied toward the new health care bill recently approved. Is this true, and if so, when will this take effect?
In addition to the 1 percent transfer tax I have to pay my state, the real estate commission of 5-6 percent and this new tax, a total of approximately 10 percent will be paid in fees by the seller. On a home worth $500,000, there will be $15,000 in new tax paid to the government? What am I to retire on at this rate? Also, are there any exemptions from this 3 percent tax? –Bob
DEAR BOB: I don’t want to get involved with politics, but there have been many false rumors about the impact of the recently enacted health care reform legislation.
Fact: There will be a tax of 3.8 percent on certain home sales, but it will not take effect until Jan. 1, 2013.
Fact: The up-to-$500,000 exclusion of gain for married couples (or up-to-$250,000 for single taxpayers or those who file a separate tax return) has not been changed; if you have owned and lived in your house for at least two full years within the five years before the house has sold, you will be able to take the appropriate exclusion of your gain.
Fact: If your adjusted gross income is less than $250,000 and you file a joint tax return (or if you file a separate tax return less than $200,000), there will be no additional tax to pay.
Fact: If your adjusted gross income exceeds the amounts listed above, then beginning in January of 2013 you will have to pay a 3.8 percent sales tax only on any profit after you take the exclusion of gain.
Fact: To determine the amount of tax you might have to pay, you (or your financial advisor) must determine which is less: the gain you have made on the sale of your house or the amount that your income exceeds the appropriate threshold.
Complicated? Yes. Let’s look at these examples. Your adjusted gross income is $150,000. You sell your house and made a profit of $400,000. There is no change in the way you determine your gain: You take your purchase price, add any major improvements you have made over the years, and subtract that number from the net sales price. Based on this formula, if you and your spouse have owned and lived in the property for at least two out of the five years before it was sold, you are eligible to exclude all of your profit; you are not subject to the new 3.8 percent tax. Keep the money and enjoy.
Change the example so that your adjusted gross income is $300,000. Since you are eligible to take the profit exclusion of up-to-$500,000, once again you do not have to pay the Medicare tax; your entire gain is excluded, and thus there is no profit to tax.
But let’s assume you strike it rich and have made a profit of $600,000. Your income is $300,000. You can exclude only $500,000 under current law, so you will have to pay capital gains tax on the remaining balance. The rate currently is 15 percent, so you will owe Uncle Sam $15,000 ($100,000 x 15 percent).
But since your income is over the threshold, you now have to pay the 3.8 percent tax. But on what amount?
As indicated earlier, the tax is based on the lesser of your profit or the difference between the threshold and your income. Your profit is $100,000. The difference between your income and the threshold is $50,000 ($300,000 minus $250,000). In our example, the lower number is $50,000, and you will have to pay an additional $1,900 to the IRS (3.8 percent x $50,000).
According to statistics provided by the National Association of Realtors, in May of this year, for example, half of all existing homes sold for $179,600 or less. Clearly, none of these homes could make a profit of even $250,000, so if you qualify for the exclusion-of-gain requirements, you will not be impacted by this new law.
The law is new and the IRS has not yet provided any guidance. Bottom line: Don’t believe the rumors.
DEAR BENNY: My husband and I are having trouble understanding exactly what our homeowners association dues pay for. Someone once told me that if we were to take our condo and turn it upside down and shake it out, we would be responsible for everything that fell out and that is why we needed homeowners insurance.
We have no problem understanding that. We can’t figure out who is responsible when something happens inside the walls: is it the homeowners association or us?
Our current issue is that we need to have the vent line to our dryer (which goes up the wall and across the ceiling to the outside) blown out. We have owned our unit for 2 1/2 years and we do not know when or if this has ever been done — but this issue represents a possible fire hazard. The management company says it is our responsibility; however, the vent runs inside the walls. We would be interested in knowing your opinion. –Betty
DEAR BETTY: First, and I am not picking specifically on you, there is a difference between a homeowners association and a condominium. I suspect you live in a condo. Too many people confuse these two legal entities.
The answer to your question will be found in your legal documents. In a condominium, there are two such documents: the declaration and the bylaws. In the former, you will find a definition of (a) units, (b) common elements and (c) limited common elements.
Generally speaking, the unit owner is responsible for things that are within the unit itself. However, I am sure your declaration also states that unit owners are responsible for things such as a vent dryer even though it runs outside of your unit.
Here’s an example from a condominium declaration my law firm represents:
"All pipes, wires, equipment, ducts or any other item or apparatus that serves only one Unit, whether such item or apparatus is inside or outside the Unit, the item or apparatus shall be part of the Unit."