DEAR BOB: I bought a land parcel at a government auction. Iwon over another bidder who owns a neighboring property. He is angry at mebecause I outbid him. His fence encroaches onto my land. Six months ago, Iwrote to him, requiring he remove his fence. Can I remove the fence myself? –TatyanaB.
DEAR TATYANA: If you are 100 percent absolutely, positivelycertain the fence is on your side of the correct boundary line, as shown by arecent survey, it is your fence.
Purchase Bob Bruss reports online.
What is the purpose of the fence? Does it keep animals fromstraying? Before removing the fence, check applicable state and local laws tosee if the property must be fenced. Before taking action, please consult alocal real estate attorney to be certain you don’t make a costly mistake.
BUYING A REPLACEMENT HOME WON’T AVOID HOME-SALE TAX
DEAR BOB: If I sell my home in less than the two-year limitfor that Internal Revenue Code 121 tax exemption, is there a tax law aboutbuying a replacement home within a period of time? I bought our current home inJune 2005 and am moving out of state for health reasons –Jane T.
DEAR JANE: There is no tax law allowing tax exemption ordeferral upon the sale of your principal residence if you buy a replacementprincipal residence. That old tax law, Internal Revenue Code 1034, was repealedin 1997.
Presuming you have a valid health reason for moving,evidenced by a physician’s statement, then you can qualify for a partialInternal Revenue Code 121 principal-residence-sale tax exemption.
Because you don’t meet the full 24-out-of-last-60-monthsownership and occupancy test, the percent of your exemption will be based onthe number of months of ownership and occupancy.
For example, if you owned and occupied the home as yourprimary residence for 18 months before its sale, then you qualify for 75percent (18/24) of the $250,000 single-person tax exemption (or 75 percent ofthe $500,000 exemption for a qualified married couple filing a joint tax returnin the year of home sale). Full details are available from your tax adviser.
PROS AND CONS OF CONSTRUCTION TO PERMANENT MORTGAGE
DEAR BOB: My fiancé and I recently bought a home to beconstructed by a home builder. He offered construction to permanent mortgagefinancing. I am now having buyer’s regrets that I am locked into this housebefore its completion. The builder is paying the interest on the constructionloan during the one-year build period. We will refinance with a permanentmortgage after the house is completed. What are the pros and cons of thisarrangement? –Monica T.
DEAR MONICA: If it will take a year to build your new home,it must be the Taj Mahal! Most new homes take six to nine months to complete.I’m glad the builder is paying the construction loan interest.
Does your contract say what happens if there are costoverruns? That frequently happens. Is the builder well capitalized with asuccessful record? I hope he’s not a Homer Simpson type.
The big question is what will be your interest rate andterms on the permanent mortgage when the house is completed?
Maybe you can find a better mortgage elsewhere. Does thecontract require you to accept the builder’s permanent mortgage financing? Oris there a penalty if you get another mortgage on better terms elsewhere? Theseare questions that you should have asked before signing the mortgage papers andpurchase contract.
The new Robert Bruss special report, “The 10 KeyQuestions Smart Home Buyers Ask to Avoid Getting Ripped Off,” is nowavailable for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010, or bycredit report at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.
(For more information on Bob Bruss publications, visit his Real Estate Center).
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