Dear Edith: We currently own a vacation timeshare, but we are thinking about selling it. Can you direct us to some reputable firms that handle timeshares? We have paid off the mortgage and only pay monthly dues. — D. S.
Answer: Call two or three real estate brokerage firms in the nearest town. If your place is inexpensive they won't want to handle the sale, but they may have advice. You should also take the question to your timeshare's management team.
You can also search the internet, but never pay anyone in advance to list or advertise your timeshare.
Dear Edith: My family has outgrown our two-bedroom farmhouse, but we're attached to it (it's a lovely rural lot). We'd rather renovate it and add more rooms than move. The home has been in my family since it was built in the 1800s.
We would like to change the back half by renovating the kitchen and living room and adding a bedroom. The home is currently worth about $80,000. We owe about $55,000 on the mortgage, which we refinanced three years ago to take advantage of an interest rate of about 3 percent.
We have excellent credit and could afford the payments on a mortgage of about $120,000 to $140,000. We estimate our desired renovations will cost about $60,000.
The trouble for us is how to finance the project. It seems we don't have enough equity to get a loan of that sort. Is there a way to borrow $60,000 and add it to the existing mortgage? We've been told by banks that we could take out a loan for the renovations, but the short payback period (of about 8 years) would make the payments too high. — Anonymous
Answer: The Federal Housing Administration offers a special type of long-term mortgage that is exactly right for you. I checked with a mortgage broker and it's still available. An FHA 203K refinance will base a loan on your home's new value after the renovations. Funds would be disbursed after inspections while the work is being done.
You can call local lenders to see who handles this government program, or more simply, ask a mortgage broker to refer you to a lender.
Renting to the Kids
Dear Edith: I am thinking about buying a second home so my daughter and son can live in our current home. My daughter could live there and contribute toward the loan, or I could rent the home to her.
I believe I could claim different tax deductions in each case — I would have to report her rent as income, for example. Which option do you recommend? — M.
Answer: The best option is different for different people. You need advice from an accountant who will consider your financial situation and your kids'. If you've had a CPA helping with your tax returns, ask him or her. If you don't have an accountant, this would be a good time to find one. Assuming you end up becoming a landlord, you'll want professional help.
Remodeling to Sell
Ms. Lank: We had to move out of state for my husband's job, and we remodeled our home in preparation for putting it on the market. Can we deduct any of those expenses? — J. W.
Answer: If you took remodeling expenses into consideration on your tax return, they wouldn't be deductions. They'd be added to the cost basis for your home. The larger question is, what did you want to deduct those expenses from?
If you own and occupy a home as your main residence for at least two of the five years before you sell, you can claim the home sale tax exclusion. If and your husband file joint taxes, you could see a profit of up to $500,000 on the sale before any capital gains tax is due. And if your move was mandated by a job transfer, you might not even need those two full years to qualify for the home sale exclusion.
Breaking My Lease
Ms. Lank: I am 67. I'll be working till the pope becomes a Protestant. I have a lease that ends January 2017. I may have an opportunity to transfer to another state with my company, but my lease states that I must fulfill the full term. You stated in a previous column that there might be an opportunity for people over 65 to get out of a lease. Please advise if there is a means. — Anonymous
Answer: Most states allow older tenants to break a lease in order to enter a senior facility. In some states, they may also get out of the lease if they provide a doctor's note saying they will move in with a relative to be under their care. I don't know of any provision, though, that extends that right to a job transfer.
It can be difficult to re-rent a residence in January, so perhaps you and your landlord can reach some compromise for earlier termination.
Contact Edith Lank on www.askedith.com, or 240 Hemingway Drive, Rochester NY 14620.