House Calls by Edith Lank

Dear Edith: I never miss your column. The mortgage on my home has been paid off for over 20 years. I am not trying to sell my property at this time, but may next year. It has come to my attention that no papers were filed with the county clerk to indicate the mortgage was satisfied. The original company is out of business, and the mortgage was sold at least twice before I paid it off. Is this a problem I should look into further or is it OK to just leave well enough alone? — L.

Answer: How come you didn't follow my advice 20 years ago? I always urge homeowners to keep after their mortgage companies until a payoff is entered in the county's records. It would have been easier to accomplish in the first place than it will be now.

Nothing bad will happen if you ignore the matter, until you try to sell your home. Then the buyer will learn the records show a big debt out against the property. That could hold up a closing. You might as well contact a lawyer and start the clearing-up process now.

Replacing Cabinets

Dear Edith: In response to the person who asked about replacing built-in cupboards. We had the same in our house, which was also 50 years old. We looked into buying new cupboards, but they were not put together as well as our built-ins. So we painted the cabinets, put on new hardware and replaced the counter top. It looks like a new kitchen. — A.M.R.

Only Child Inheriting

Dear Miss Lank: When I pass away, I would like to leave my house and property to my only child. What does this entail and how does it work? Would he have to refinance or what? — E.L.

Answer: When real estate is inherited by a family member, lenders do not usually call in the loan.

It's a simple matter to have a lawyer draw up a will in which you state what you want done with your property. If you are married, things may get a bit complicated, because a surviving spouse is usually entitled to a share of the estate. The lawyer can explain that.

Lots Of Ads

Dear Edith: I have advertised my home for sale in the newspaper and online in at least 10 sites including Realtor.com and had only a few inquiries but no follow through.

We paid $249,900 and put $35,000 into it in the last eight months of ownership so that it is "turnkey." In order to sell my home how low do I have to go? — Via e-mail

Answer: You'll have to go however low it takes to attract buyers.

The figures you gave me don't mean a thing. It's no use basing your asking price on how much you've invested. Suppose you originally overpaid by $50,000? Must a buyer to make that up to you? Suppose you received the place as a gift? Must you give it away?

Analyze recent sale prices of nearby property to see how much buyers seem willing to pay these days to live on your street. If houses in your neighborhood are still selling for much less than you're asking, then you've over-improved the place and aren't likely to get your money out. Buyers with more to spend will be looking in other areas.

Exposing the house widely on the market is excellent. All the advertising in the world, though, won't sell an overpriced property.

Advice From A CPA

Dear Mrs. Lank: Few homeowners establish a tax basis schedule for their homes when they purchase and then maintain it during their period of ownership. We have both seen the changes in tax laws over the years. None of us knows what the tax laws will be when the homeowner eventually sells.

The prudent homeowner/taxpayer keeps a good record of their cost basis in case the law changes again. In fact, it did this January 1 with limitations on conversion from a second residence or rental property to principal residence for purposes of the two-out-of-five-year exclusion. — R.F.S., CPA

Answer: You're right. Right now most home sellers have a tax break that covers up to half a million dollars in profit with no federal tax, but there's no guarantee that won't ever change. Every homeowner should keep track of the property's cost basis, which starts with purchase price and includes money spent on permanent improvements (not counting repairs or redecorating.) Basis often changes when a co-owner dies, as well.

The recent change you mention sets some complicated limitations on use of that home sellers tax break if the main home being sold had formerly been used as a vacation house or a rental.

What's the difference between death and taxes?

Death doesn't change every time Congress meets.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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