Q: I sold acreage on a contract for deed in 1973. Except for the down payment, the buyer never made another payment on the principal. I have now cancelled the contract for deed and obtained a quit claim deed. I have paid past due real estate taxes (with interest and penalties). In 1974, I paid long-term gains tax for the 1973 down payment. Am I now liable for long-term gains tax?

A: No, You have no further tax liability as a result of this transaction.

Q: In 1972, my wife and I purchased a home in Maryland for $40,000. Since that time we have improved the property considerably, to the tune of about $15,000. With inflation, we figure that the house is now valued at approximately $77,000. Are we are correct in our estimation? Can we refinance our house for $77,000 to pay off our first mortgage and a $10,000 second mortgage? What would the procedure be? Can we (and would it be wise) to put the house in our children's names?

A: To answer your questions in the order you've asked them: It's possible you are correct. Single-family houses have appreciated diferently in different locations. There are other factors, too, that have affected appreciation (e.g., maintenance, neighborhood influence, assessment and a tax rate structure, style, etc.). The only way you can get a reasonably accurate current market value is to have an appraisal made by a qualified appraiser. (As a matter of fact, this will be required if you decide to refinance.)

You should be able to refinance. But not for full current market value, of course. Typically, you can refinance for 70 to 80 percent of current market value. Today, with the mortgage money somewhat tight, perhaps 75 percent is the maximum loan-to-value ratio. As to procedure, first try your neighborhood (or nearest) savings and loan institution. Then you can try others, if you're unsuccessful, or to compare interest rates and terms.

If you belong to a federal credit union, you also might try that. Its rates, for you as members, should be a bit more favorable than the nearest savings and loan institution.

You can convey your house to your children, retaining a life interest, if you wish. Experience has shown that this is often unwise unless there are unusual circumstances that dictate it.