DEAR BOB: I've seen several newspaper ads about homes and other properties for sale with 29 percent down payments. Why is this odd figure used? Herb G., Gaithersbury.
DEAR HERB: Because, to qualify for an installlment sale, the property seller cannot accept more than 30 percent of the property's gross sales price. Just to be safe, many sellers specify 29 percent down.
By the way, those 29 percent down payment ads can be bargain signals. They mean the seller is willing to help finance the sale by taking back either a first or second installment sale mortgage. This gives the buyer room to negotiate favorable terms such as a low interest rate, long payback period, or other goodies. Of course, just because sellers say they want 29 percent down doesn't mean they won't take less.
DEAR BOB: I own a recreation lot in Pennsylvania that I have tried to sell for several years. Although I told the realty agent to bring me any offer, none has materialized. I have been paying property taxes all these years. If I abandon this lot, can I take a tax deduction for it? Edna F., Manassas.
DEAR EDNA: Yes, if you bought it for investment. Internal Revenue Code section 165C allows such loss deductions. Your tax advisor or attorney can show you how to abandon the property - there is a right way and many wrong ways to do so. It's especially tricky if a mortgage is involved.
DEAR BOB: In a recent article you said that the new $100,000 home sale tax exemption requires only one co-owner spouse to be 55 or older on the day of the title transfer. Last January we asked an attorney and he said both spouses must be 55 or older to qualify. He said the spouse who was younger than 55 would have to pay tax on half the sale profit. True? Harold B., Rockville.
DEAR HAROLD: False. Your attorney gave incorrect information. Only one spouse need be 55 or older to qualify for the $100,000 profit tax exemption when you sell your house. Waiting until the other spouse becomes 55 or older gives no added tax savings. You need to see a new tax advisor.
DEAR BOB: As a home seller, is it dangerous for me to let a buyer assume my old mortgage?If he or she defaults, will I be liable too? Friends have told me not to let a buyer assume my VA home mortgage. Hal M., Glen Burnie.
DEAR HAL: Your friends are wrong. It is usually best for a seller to let the buyer assume an existing mortgage if the lender will release you from further liability. In the case of a VA mortgage, a release of liability may entitle you to another VA home loan in some situations. Ask your lender.
DEAR BOB: I am 58 and my wife is 54. She will be 55 next March. Since I already qualify for that $100,000 home sale tax exemption, should we wait to sell our home until next March so we can get a $200,000 tax exemption?Henry A., Rockville.
DEAR HENRY: No. Only one $100,000 home sale tax exemption for persons over 55 is available per marriage. Waiting to sell your home until your wife becomes 55 won't give you any extra tax savings. I presume you have owned and lived in your principal residence at least three of the five years before sale so that you can exempt from tax up to $100,000 of sale profits. Your tax advisor has full details.
DEAR BOB: What are the requirements to qualify for deducting moving costs on our income tax returns? Iona J., Upper Marlboro.
DEAR IONA: The moving expense tax deduction requires a change in job location. Both employed and self-employed persons can qualify.
Your new job location must be at least 35 miles further away from your old home than was your old job site. For example, suppose your old job was located 10 miles from your old home. If your new job site is a least 45 miles away (10 plus 35), then your moving expenses are tax deductible if you move to a new residence. Both renters and homeowners can qualify if they work at the new job site for a least 39 weeks. People who are self-employed must remain at the new job location at least 78 weeks. Ask your tax advisor for more details.
DEAR BOB: We have a winter condo in Florida where we live five months of each year and another home, owned since 1935, where we be eligible for that new $100,000 tax exemption if we sell the house we owned since 1935? Also, can a person who used the old "over 65 rule" $35,000 exemption use the new $100,000 exemption? Lawrence S., Bethesda.
DEAR LAWRENCE: To qualify for the new $100,000 home sale profit tax exemption, you or your co-owner spouse must (1) be 55 or older on the day of title transfer, (2) have owned and lived in the principal residence at least three of the five years before sale, and (3) never have used this new tax rule before. However, if you used the old, now repealed, "over 65 rule" $35,000 exemption, you can also use the new $100,000 exemption too. Ask your tax advisor for further information.
I'm sending you a copy of my report "How to Get Up to $100,000 Tax-Free Profits from the Sale of Your Home," which gives details on this tax break. Readers desiring a copy can get one for 25 cents plus a stamped, self-addressed enveloped. Write to P. O. Box 6710, San Francisco, Calif.941101.