DEAR BOB: My wife and I are interested in buying a condominium for investment purposes. But the condo homeowner association tells us we cannot rent it to tenants and must keep it vacant or live in it. Can they legally impose this restriction on us? –Joe M.
DEAR JOE: Yes. When you buy a condominium or any property subject to homeowner association CC&Rs (covenants, conditions and restrictions), you agree to abide by them, plus the condo association bylaws and rules.
Purchase Bob Bruss reports online.
The best condo complexes have restrictions or complete prohibitions against rentals. When you see a run-down condo complex, chances are it has a high percentage of renters who don’t care about proper maintenance of the condo common areas.
When the percent of condo renters exceeds 20 percent to 30 percent, most mortgage lenders either refuse to make new loans there or charge above-market interest rates because of the increased risk of foreclosure. When there are many absentee condo owners renting their units, that is not a good sign.
WHEN DOES TWO-YEAR REQUIREMENT END FOR $250,000 HOME-SALE EXEMPTION?
DEAR BOB: I purchased and moved into my current home in July 2005. I sold my previous residence in September 2005 and claimed that $250,000 home-sale tax exemption. When does my two-year requirement end for the $250,000 exemption; is it in July or September 2007? –Tamaki K.
DEAR TAMAKI: If you used your Internal Revenue Code 121 $250,000 exemption (or $500,000 for a qualified married couple filing a joint tax return) for the sale in September 2005, you cannot use that exemption again for 24 months.
Presuming you owned and occupied the home purchased in July 2005 since then, you will meet the 24-month minimum ownership and occupancy test in July 2007.
However, you are not eligible to claim use of IRC 121 again until September 2007 so wait until after that date to sell your current principal residence. Ask your tax adviser for further details.
WILL HOME TITLE TRANSFER TO LIVING TRUST CAUSE PROPERTY TAX REASSESSMENT?
DEAR BOB: I am concerned that when we change the title on our home from my wife and me as joint tenants into our living trust, the local property tax assessor will consider this an ownership change and reassess our home to raise our property taxes or revoke our homestead exemption. Is this going to be a problem? –Richard S.
DEAR RICHARD: A personal-residence title transfer from two individual owners to the same two individuals who are the beneficiaries of their revocable living trust does not cause property tax reassessment or homestead revocation in most jurisdictions.
However, in Florida some county recorders and assessors insist the words “revocable living trust” be clearly stated on the deed.
Just to be safe, before transferring title please consult an experienced local real estate attorney and/or the county deed recorder and tax assessor to check for any unusual local requirements.
The new Robert Bruss special report, “2007 Realty Tax Tips: Eight Chapters of Tax Savings for Homeowners and Realty Investors,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 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
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