Dear Edith: Here's a different kind of question for you. When my father died recently, we went through some family papers and discovered that my great-grandfather had hidden some valuable Civil War pistols in his home. This is a house our family sold a few years ago.

I don't know if the guns are still there, but they might be; it was a good hiding place. Or, maybe the new owners found them already (if they remodeled, for instance). We believe the pistols are worth a great deal of money, but I just want them to keep as an heirloom.

My lawyer scratched his head and is looking into the matter. What I wanted to ask is: How can we approach these people? I don't know what they're like, whether they'd be greedy or cooperative, won't let us in the house or what. Do you have any ideas? — D.

Answer: No matter what your lawyer reports, those homeowners own the island and you have the treasure map. Seems to me cooperation is needed here.

Perhaps, you could approach these people without revealing details, with a written agreement to share the value of anything you might find. Run that one past your lawyer and see what he thinks.

Or, perhaps someone will write in with a better idea, advice or information for you. Do tell us what happens; it's an intriguing situation.

Buyer Still Calling

Dear Edith: We sold our house 19 months ago, and the buyer is still calling us whenever he has issues with anything. We're trying to be nice, but for how long are we responsible? — Via e-mail

Answer: You are liable for any major defect that you knowingly failed to disclose to the buyers. Beyond that, it's probably a matter of personalities; you'll just have to deal with it as you see fit.

Buying New House

Dear Edith: I own a house now, with a second mortgage. I want to move to a nicer neighborhood with better schools, etc. Prices here have dropped, and I found a house within my price range. If I sell my present home at the price my broker suggests, I will come out still owing the bank $10,000 I do not have. Do I go $10,000 in debt to take advantage of today's lower prices, or do I wait and pay down my present mortgages? — Via e-mail

Answer: These days, just wanting something is not enough.

I wonder whether you really have any choice. If you must borrow to pay off your present loans, what would you use for down payment and closing costs on the next house?

Lenders are tightening their requirements these days to head off exactly the kind of problems you're faced with now. Before you do anything, consult a mortgage broker, or perhaps more than one. I suspect they'll say you couldn't finance a new house at all.

And anyhow, when you're buying and selling in the same market, it doesn't much matter whether prices are up or down. No need to hurry.

Worried About Taxes

Dear Edith: My wife and I want to move to be near our daughter. We put our home on the market and began to look in her area. While waiting for this one house to sell, we lost two houses we were interested in buying. Finally, we had a buyer for our home and contracted to buy another house. Then our "buyer" ran into financial trouble, so our present home is back on the market with no sale in sight.

We want to close on the new house, anyhow. Our question is whether or not we can still roll the profits from the sale of our present house into the higher price of the new house. I know we could do so if we sold first and then bought, but is the reverse also true? In addition, what if the home we live in doesn't sell until 2009, making the two transactions in different tax years? — W.S.

Answer: No problem. It's been many years since the IRS cared whether or not you bought a replacement residence. You can sell your home and take up to $500,000 profit, free of any capital gains tax, if you simply owned and occupied the place as your principal residence for at least two of the five years before the sale.

As for how to move your present home — remember that anything will sell promptly if the price is right. You may come out ahead if you just bite the bullet now and reduce your price to whatever it takes, rather than bearing the expenses of two houses. And you'll be near your daughter all the sooner.

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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