Edith Lank

Dear Ms. Lank: Did you know that there will be a 3.8. percent tax on homes sold in the year 2013 to finance the Obamacare program? -- Email
Answer: No, there won't.
You'd have to make more than half a million dollars profit on the sale of your home before any extra tax would be due. Even in that case, it wouldn't be a tax on your sale price or on that first $500,000 but only on any capital gain above that amount. For single taxpayers, the tax will start after the profit reaches $250,000.
What's more, you still wouldn't be taxed unless your other income was more than $250,000 for a couple or $200,000 for a single taxpayer.
Nearly all of us have nothing to worry about.
Worrying About Profits
Dear Edith: Four years ago, I became a Florida resident and my summer home up north became my secondary home. Today, I would like to sell my summer home and build another home in the same area. If I make a profit on the house up north can I put all of the profit into the building of that new home without creating a tax event? Or should I change back and become an official resident up north before selling my summer home? -- D.
Answer: These are some fairly complicated tax rules so each of these paragraphs takes a different point.
--The IRS allows some tax-free profit on the sale of your main residence but not on your vacation home. In any event, it no longer makes any difference what use you make of the proceeds.
--If you went back to being an official state resident up North, you could qualify for tax-free profit on the sale of your summer home if it became your principal residence for at least two of the five years before you sold it.
--All of this is treated differently by the IRS if that second home has been used as rental property. If that's the case, get more details from a CPA, enrolled agent or tax attorney.
Until a few years ago, the one question that came in most often to this column had to do with taxes on profit from the sale of one's home. Seems like old times, someone worrying about that again. Maybe things are looking up!
Finding Retirement Living
Dear Mrs. Lank: Each week I look at the new homes section hoping to find affordable retirement living. What that means to me is a smaller floor plan, garage, yard and close to shopping. I have seen some good ones but they are still a bit pricey. It could even be a rental/lease, two or four-unit but built for the 55 and older set. I would certainly think with so many retirees living longer now, there would be developments for the average income person to live. -- S.
Answer: You don't need to keep searching on your own. When you see an open house advertised for something that looks possible, visit it, and start a conversation with the agent there. If the first broker is busy or doesn't seem compatible, keep visiting open houses.
When you find a broker who is interested in your search, work with him or her. A good agent will calculate how much you can afford and suggest properties places that suit your requirements. It won't cost you anything and it'll be much more efficient than trying to find the right place by yourself.
You might also try contacting your local senior center. They may have a list of affordable living possibilities.
Half a Question
Dear Ms. Lank: If someone gives title to someone else and no longer pays the house payment or the taxes or the insurance. The person she gave title to does. Then does the person giving title risk anything other then their credit and a possible foreclosure if the person. -- Email
Answer: It looks as if you meant to ask what danger is there to the original owner, if the new owner doesn't keep up the payments.
That original owner once signed a note, a personal promise to repay the loan, which went along with the mortgage documents. Giving the house away doesn't cancel that note. If the mortgage payments aren't made, the lender has the right to sell the house at a foreclosure auction. And if the auction proceeds don't pay off the loan, the lender also has the right to collect on the personal note, perhaps by getting a judgment against the original borrower. Lenders don't always do that, but they have the right.
For that matter, with most mortgages today, the lender has the right to call the whole loan in immediately (all due and payable) as soon as there's a change in ownership. Again, they might not do it but they could.


Edith Lank

Edith Lank is an authority on housing issues.

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