Q. I want to point out a misstatement of the tax law in your June 4 column.
You said, among other things, "You man exclude from your gross income part of all of the gain from the sale of your 'principal residence' if you or your spouse are 65 years old or older before the date of sale, and you owned and occupied the 'principal residence' for five years (continuous or interrupted) out of the last eight years before the sale. You may exclude the gain, generally, if the adjusted sales price is $20,000 or less. If the adjusted sales price exceeds $20,000, you may exclude part of the gain." The Tax Reform Act, if I'm not mistaken, raised the sales price limitation to $35,000.
A. Thank you very much for pointing out this misstatement. It came about because Internal Revenue Service Publication 523. "Tax Information on Selling or Purchasing Your Home" has not made the change in its text. So, effective Jan. 1, 1977, you may exclude the gain, generally, if the adjusted sales price is $35,000 or less. If the adjusted sales price exceeds $35,000, you may exclude part of the gain.
For the homeowner who is 65 years old or older (or whose spouse is 65 year old or older) before the date of sale of yuor "principal residence," may I suggest you get Internal Revenue Service Publication 523 and read it carefully. You need to do this to understand what is meanty by (1) "gain" on sale of your home, (2) "adjusted sales price" of your home, (3) "date of sale" of your home, (4) the complete circumstances of exclusion of all or part of your gain if you or your spouse are 65 years old or older.
Q. I read a series in Newsday on the practice of speculators in the New York area obtaining legal title to tax delinquent properties by paying outstanding unpaid property tax bills covering a five-year period. Other than public tax sales, what ways do jurisdictions in this area convert real estate on which taxes haven't been paid to tax revenue generating property?
A. In the District of Columbia and Maryland, the statutes provide that real estate sold on account of delinquent taxes must be sold at public auction.
In Virginia, the statute doesn't require a sale at public auction. But as a practical matter, sale at public auction will almost always be the method used.
If you want to pursue this further you may find it wise to examine the apposite statutes. Here are the statutory citations: District of Columbia Code, Title 47, Chapter 10, Section 47-1001; Annotated Code of Maryland, Article 81, Section 80; Code of Virginia, Title 58, Chapter 1, Article 8, Section 58-117.