House Calls by Edith Lank

Ms. Lank: We're very interested in buying a foreclosure that is slated for auction next month. We've been advised to skip the auction because the lender typically wins and it's not a great place for first-time bidders to get a good deal. As far as we can tell, the home was not up for sale before going straight to foreclosure. Have you ever heard of contacting the bank with an offer to try and get under contract and avoid an auction scenario? We have a good idea of what is still owed on the home and would base our offer on that. — Via e-mail

Answer: The bank doesn't own the property yet, not until buying it at the auction. To purchase before then, you'd buy directly from the unfortunate homeowner. A real estate broker or lawyer could help you investigate whether the process can be held off, saving everyone further costs while you negotiate with the owner.

Figuring The Taxes

Dear Edith: I own two parcels of undeveloped land that have been in my family for generations. They were deeded to me by relatives, one in 1976, and the other in 2004 (each for "$1").

If I sell the land:

Will I have to pay capital gains taxes on the entire sales price, less selling costs?

Will my gain be the difference between selling price (less costs), and what the land was valued at when it was deeded to me? Or some other calculation? — J.B.

Answer: A is wrong. Tax is not based on the entire sale price.

B is wrong. Value at the time of a gift doesn't count as your cost.

So the answer is C, some other calculation.

If you had inherited the properties, you would have a "stepped-up" cost basis, valued at the time of death. But when you receive real estate as a gift, you also take over the donor's cost basis.

That may be hard to determine if the parcels have been in the family for generations. But, if whoever signed them over to you had previously inherited them, he or she would have an old stepped-up basis.

Too many "if's" here. Discuss the whole thing with a tax lawyer, CPA or enrolled agent.

No Payoff Document

Ms.

Lank: We paid our mortgage off six months ago and it has not been recorded as released via our Public Records Office. I know the individuals at the county so they have been watching for this information. Who do I report Countrywide's lack of action to? I feel this is a very reportable offense on their part! — J.L.

Answer: You report it to Countrywide (which has, I must say in its defense, a lot on its plate these days.) They've had long enough to record the satisfaction of your mortgage, and most states require them to do so. At the very least they should send you the document, which you could record yourselves.

Keep after them. Phone regularly and give them two months more. Then write the CEO of the company. A librarian can get you the name and address. Mention that you're sending a copy of the letter to the state agency that supervises mortgages, and do so.

Appraisal For Listing

Ms. Lank: Is it advisable to get your home appraised before listing to sell? Or, is the price to list from a real estate agent just as good? — K.S.

Answer: For listing purposes, an experienced neighborhood agent usually has a pretty accurate idea of what a house is likely to bring.

Inviting agents from three nearby brokerages to come over and talk is a good way to locate a broker who inspires confidence, i.e. someone you'd like to work with. Meanwhile, they'll give you three different estimates of probable selling price, based on their research and familiarity with your area. That should do just fine.

Widow Using Exclusion

Dear Edith: We bought our home in 2005. My husband died in July of 2007. I am going to sell our house in June 2009. In calculating my 2009 return, am I entitled to his capital gains allowance of $250,000 in addition to my $250,000? My accountant says "no." Others have told me he's mistaken. — Via e-mail

Answer: I have to wonder where you're located, and if you've made a profit of more than $250,000 selling your home after only these particular past few years. But at any rate:

Your accountant may be thinking of an older IRS regulation. The rule now is that you can take the entire $500,000 married-couples tax exclusion if you sell your home "within two years of the date of death." Just make sure your actual settlement date takes place in time.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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