Weak Market Creates Advantages for Lower-Income Buyers

The housing bill also provides some extra funds for cities and states to encourage housing. Contact your local housing authority to see if it is going to offer below-market loans or start other housing programs to aid local residents of modest means.

My father recently died, and my siblings and I sold his house and split the profits according to his will. What would be the best way to keep from paying taxes on this gain? It's approximately $14,000. If I put it in a Roth IRA or regular IRA, would that shield me from the tax burden? Please give me some advice on what to do with this money so it's not so devastating when tax time comes.

Here's some good news: It's likely that you don't owe any taxes on this inheritance. When you inherit property, you inherit the property at its value at the time the person died. Generally, if you sell it within a year of the owner's death, the IRS views the property's value at the time of the sale as the same as it was on the day of death. Thus, there is no capital gain taxable to the heirs, even if the property gained significantly in value during the years your father owned it.

Finally, if there is tax to be paid when you sell real estate, you can't avoid paying it by putting the proceeds into a retirement account.

My neighbor is on the verge of losing his home because he can't keep up with the payments. He is not behind in the payments yet, but it's going to happen. I would like to buy the house, but I need time to clear up some credit issues. Can the neighbor quitclaim deed the house to us? We would make the mortgage payments so that his credit won't be compromised until we can buy it. Or is there another way to do this?

Your neighbor certainly has the right to quitclaim his interest in his home to you and to have you make the payments on the mortgage. But the real question is why he would want to lose control over his house and lose any equity he may have when you have your own credit problems to deal with.

If your neighbor has equity in his home -- that is to say, the value of the home exceeds the amount he owes to his lender -- he would want you to pay him at least that before he would be willing to transfer the keys to you.

Many people sell their homes to strangers when the strangers say that they will keep up the payments on the old mortgage. The buyer would acquire the home subject to the old loan. But if the new buyer stops making payments to the lender, the only thing that buyer loses is the home. That new buyer's credit does not get hurt. If the lender found out about the sale, the lender could exercise its rights under just about all mortgages to accelerate the debt. That would mean the lender is calling the loan and it would have to be repaid.

Frankly, this is one of the biggest scams going on right now, and savvy homeowners would do well to steer clear of strangers promising to make all their financial problems go away if they simply sign over title to their home.

Your neighbor would be taking a huge risk if you could fail to make the mortgage payments. If that happened, his credit would be shot, the home would be lost and he might be worse off than if he just let the lender foreclose.

Ilyce R. Glink is an author and nationally syndicated columnist. Samuel J. Tamkin is a real estate lawyer in Chicago. If you have questions for them, write Real Estate Matters Syndicate, P.O. Box 366, Glencoe, Ill. 60022, or contact them through Glink's Web sites, http://www.thinkglink.com and http://www.expertrealestatetips.net.

© 2008 Ilyce R. Glink and Samuel J. Tamkin

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