Dear Edith: We had a $22,000 write-off from our short sale. It was money we didn't have to pay back on our mortgage.

Our accountant said we had to declare this as income. This caused us to owe money on our taxes instead of receiving a refund. I saw your response to this same scenario stating that we do not have to file this as income.

Is it possible to forward any literature you have confirming this, and also, how do we go about changing or editing our taxes we already submitted to the government? — J.F.

Answer: Assuming your short sale took place in 2007, you probably needn't declare that shortfall as income. Your accountant may not yet be aware of the new regulation on forgiven mortgage debt, which is in effect for 2007 through 2009. There are limitations, though. The property must have been your principal residence, for example, and the debt must have been incurred to purchase or improve it.

Perhaps your sale took place before 2007. Otherwise, go back to your accountant to see if you qualify to file a simple amended tax return. If you're still not satisfied, there's enough money involved to justify double-checking with another CPA.

Widowed Spouse Selling

Dear Edith: I'm a local real estate paralegal and love your column.

Part of the end of year tax package that passed in Congress is a provision that allows widows and widowers who sell their principal residence within three years of their spouse's death to exclude gain on the sale up to $500,000. The rule applies to sales starting this year. So the new widower who wrote in to your column will qualify for the full exclusion. —M.M.C., RP

Answer: Thanks for the information, and thanks also to those who wrote pointing out that the widower probably had a stepped-up cost basis after his wife's death anyhow. I usually do mention that, but I simply forgot!

About the Perc Test

Dear Edith: You mentioned a perc test in a previous column. What exactly is it? How does one decide when to do a perc test, and who decides if it passes or fails? Please beam me up. — J.P.T.

Answer: A perc, or percolation, test measures whether the soil is suitable for handling a septic system. Wherever no sewers are available, the land must usually pass a perc test before local authorities will OK a lot for building.

You can find out more than you'll ever want to know at this link: http://en.wikipedia.org/wiki/Perc_test.

Found His Own Buyer

Dear Edith: I'm looking for a little advice. My fiance and I recently purchased a home together. She sold her home using the same agent who sold us the new house. I agreed to use him to sell my own house. He inspected my home and ran comparative neighborhood sales, etc., but I have not signed any listing agreement yet, with the idea of doing some painting first.

Yesterday, a friend of a friend asked to see my home. She is very interested in buying, and wants to visit and talk again next weekend. How should I handle this? How much should I attempt to do without a broker? Can a lawyer take care of the offer, negotiations, other paperwork, etc.?

Obviously, the idea of saving money on commission is appealing, but is this the best way to go? Since I showed the house and assuming they may buy, what role would an agent have? — J.L.

Answer: It's possible to list your house with an agent, with the provision that no commission will be due if the place is purchased by that specific person. Your broker may agree to that. Or, you might offer a reduced commission if the friend ends up buying because, as you realize, you'll still need some help.

Finding someone who wants to buy is really just the tip of the iceberg. Making sure they're financially able, negotiating a written agreement and guiding the whole transaction through to closing requires time, skill and effort.

While you should certainly involve your own attorney, frankly it's expensive overkill to use a lawyer for the work a broker usually performs. Nor would your lawyer necessarily have the same real estate skills an experienced broker would.

Lease Purchase and Rent-to-Own

Dear Edith: What is the difference between lease purchase and rent-to- own? — J.

Answer: There's no difference. Both refer to an agreement that the buyer will move in as a tenant and complete the purchase some time in the future. It's also referred to as a land contract. If the potential buyer has a choice about going through with the eventual purchase, the agreement is a lease-option.

Every arrangement is different, and any contract should be drawn up by lawyers for each party.

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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