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Seller Tactics

DEAR BOB: My husband and I bought our condo in 1999. In 2000 we had to pay a $15,500 special assessment for replacement of outdoor wall siding and roofs. Now we anticipate another large special assessment to update hallways and elevators. When we sell our condo, can we deduct these special assessments?

-- Chris L.

DEAR CHRIS: No. But you can add your special assessments to the adjusted cost basis of your condo. The result is to reduce the amount of your capital gain. Consult a tax adviser for details.

DEAR BOB: You have said several times the way to convey title to real estate into a living trust is by a quitclaim deed signed and notarized by the owner. That's what we did. But now we want to sell our house, which is in our living trust. How do we do that? -- Janet Y.

DEAR JANET: That's easy. Presuming you are the trustee of your own revocable living trust, you simply sign the deed as trustee. For example, you would sign the deed "Janet Y., trustee." However, before doing so, check with the title company that will be insuring the title for your buyer. It might be necessary to produce a copy of your living trust for the title insurer.

DEAR BOB: As I recall, about a year ago you wrote about reverse mortgages. I think you said a reverse mortgage can be used to buy a retirement home. How does that work so there are no monthly payments? -- John R.

DEAR JOHN: The only reverse mortgages for home purchase are available from Fannie Mae. The other two reverse-mortgage lenders, Financial Freedom Plan and FHA, do not offer these mortgages to buy a retirement home.

For details, consult a reverse-mortgage originator offering Fannie Mae reverse mortgages. As a general rule, you will need to make a cash down payment of about 50 percent of the home's purchase price. Of course, you must be 62 or older. To find a local Fannie Mae reverse-mortgage originator, go to http://www.reversemortgage.org/ .

DEAR BOB: We refinanced our home loan in 2005 for 90 percent of its market value. As a result, we pay private mortgage insurance of about $193 per month. The mortgage broker told me that when we have 20 percent equity we can cancel the PMI. We did some major remodeling and a room addition. Now we have about 25 percent equity and the PMI is a total waste of money. But the mortgage company refuses to cancel our PMI because our loan isn't 24 months old. Is this legal?

-- Todd W.

DEAR TODD: Yes. If your mortgage was sold in the secondary mortgage market to Fannie Mae or Freddie Mac, their guidelines allow PMI cancellation after 24 months of on-time monthly payments if your equity exceeds 20 percent. You obviously don't yet meet the 24-month test, so just be patient.

Readers with questions should write Robert J. Bruss at 251 Park Rd., Burlingame, Calif. 94010, or contact him via his Web page, http://www.bobbruss.com.

© 2006 Inman News Service


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