DEAR BOB: I bought a land parcel at a government auction. I won over another bidder who owns a neighboring property. He is angry at me because I outbid him. His fence encroaches onto my land. Six months ago, I wrote to him, requiring he remove his fence. Can I remove the fence myself? –Tatyana B.
DEAR TATYANA: If you are 100 percent absolutely, positively certain the fence is on your side of the correct boundary line, as shown by a recent survey, it is your fence.
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What is the purpose of the fence? Does it keep animals from straying? Before removing the fence, check applicable state and local laws to see if the property must be fenced. Before taking action, please consult a local 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 limit for that Internal Revenue Code 121 tax exemption, is there a tax law about buying a replacement home within a period of time? I bought our current home in June 2005 and am moving out of state for health reasons –Jane T.
DEAR JANE: There is no tax law allowing tax exemption or deferral upon the sale of your principal residence if you buy a replacement principal residence. That old tax law, Internal Revenue Code 1034, was repealed in 1997.
Presuming you have a valid health reason for moving, evidenced by a physician’s statement, then you can qualify for a partial Internal Revenue Code 121 principal-residence-sale tax exemption.
Because you don’t meet the full 24-out-of-last-60-months ownership and occupancy test, the percent of your exemption will be based on the number of months of ownership and occupancy.
For example, if you owned and occupied the home as your primary residence for 18 months before its sale, then you qualify for 75 percent (18/24) of the $250,000 single-person tax exemption (or 75 percent of the $500,000 exemption for a qualified married couple filing a joint tax return in 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 be constructed by a home builder. He offered construction to permanent mortgage financing. I am now having buyer’s regrets that I am locked into this house before its completion. The builder is paying the interest on the construction loan during the one-year build period. We will refinance with a permanent mortgage after the house is completed. What are the pros and cons of this arrangement? –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 cost overruns? That frequently happens. Is the builder well capitalized with a successful record? I hope he’s not a Homer Simpson type.
The big question is what will be your interest rate and terms on the permanent mortgage when the house is completed?
Maybe you can find a better mortgage elsewhere. Does the contract require you to accept the builder’s permanent mortgage financing? Or is there a penalty if you get another mortgage on better terms elsewhere? These are questions that you should have asked before signing the mortgage papers and purchase contract.
The new Robert Bruss special report, “The 10 Key Questions Smart Home Buyers Ask to Avoid Getting Ripped Off,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010, or by credit report 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).
