DEAR BOB: My husband and I own five rental houses together. We are very happy you encouraged us, years ago, to invest in rental houses. By making extra mortgage principal payments, two of the rental houses are now free and clear. The others will have their mortgages paid off in a few years. We now enjoy the positive cash flow from the rentals. Meanwhile, the houses have appreciated at least $100,000 each in market value. My husband recently had a “close call” with a heart attack, but he had a bypass operation and is now in good health. But it made me think about the many “stepped-up basis” questions you answer. Is there any limit to the number of properties for stepped-up basis? –Mildred H.
DEAR MILDRED: No. When a co-owner dies, whoever inherits that deceased owner’s share receives a new stepped-up basis on the inherited share. In community property states, the entire property basis is stepped up to market value on the date of death.
Purchase Bob Bruss reports online.
There is no limit to the number of inherited properties than can receive a stepped-up basis to market value on the date of death.
Congratulations on buying those five rental houses to provide for your retirement years. Not only are they great investments, but they should also provide excellent tax shelter both now and when you eventually sell them.
IF YOUR NAME IS NOT ON THE TITLE, NO MORTGAGE INTEREST DEDUCTION
DEAR BOB: For tax and Social Security reasons, I am not married to the lady with whom I have been living for the last nine months in her house. As she has limited income, I have been paying the mortgage and property tax payments. Can I deduct the mortgage interest and property taxes on my 2006 income tax returns? –Andrew W.
DEAR ANDREW: No. The reason is you are not legally obligated to make those payments. Even though you paid them, Uncle Sam will not allow you to deduct the mortgage interest and property tax payments you voluntarily paid. For details, please consult your tax adviser.
NO EASY WAY TO FORCE NEIGHBOR TO REMOVE DANGEROUS TREE
DEAR BOB: Some time ago you mentioned there were two trees on your neighbor’s lot that were leaning toward your house. Fortunately, your neighbor removed those trees before they fell on your house. That is my problem too. But my neighbor isn’t so nice. She refuses to either remove her dangerous old tree, which is sure to fall on my house in a windstorm, or let me pay to have it removed (estimated cost about $650). As you suggested, my insurance agent wrote her a letter explaining he viewed the tree and took pictures to show the danger. He warned her that if my homeowner’s insurance has to pay a damage claim from her falling tree, my insurance company will sue her in subrogation (whatever that means) for her negligence. Is there anything further I can do, as I really don’t want a tree falling on my bedroom? –Ruth G.
DEAR RUTH: Unless your city code enforcement officer can assist you (it won’t hurt to ask), your only legal alternative is to bring a private nuisance lawsuit for abatement against your neighbor.
A local real estate attorney will be needed to obtain a court injunction ordering the neighbor to remove the dangerous tree. However, the judge might not grant such an injunction so don’t get your hopes up too high.
The new Robert Bruss special report, “When It’s Smart to Prepay or Refinance Your Mortgage,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
