DEAR BOB: We just puchased our home. It has three bedrooms and just one bathroom for our family of four. Top priority goes to putting in a second bathroom. Will our construction cost be tax deductible? Joe M., Bethesda.

DEAR JOE: No. Capital improvement costs, such as remodeling and additions, ae not tax deductible. Capitalize your costs by adding them to the cost basis of your home. Save your receipts, as the improvement costs will reduce your taxable profit when you eventually resell your home. Your tax adviser can show you how to keep proper records.

DEAR BOB: Due to a credit problem several years ago, my credit isn't very good. When I find a house or condo I want to buy, would it be possible for me to specify in my purchase offer that the seller is to obtain a new mortgage? I would then buy the house and take over the mortgage payments. Mary Ann M., Lanham.

DEAR MARY ANN: Yes, it's a great idea. Just be sure you specify the maximum mortgage amount and terms you will accept. Be sure that the mortgage is not due upon transfer of title to the home. Sellers are often in a stronger position to get a new home loan than are their buyers.

DEAR BOB: Thank you for sending your report, "How Installments Sales Can Increase Your Real Estate Profits." You say that an installment seller cannot accept more than 30 percent of the sales price in the year of sale. I thought it was 29 percent. Who is right? Mrs. C.v., Falls Church.

DEAR MRS. C. V.: I am. Check Section 453 of the Internal Revenue Code. It says that payments received in the year of installment sale cannot exceed 30 percent of the sales price if the seller is to spread the profit tax over the years of the buyer's payments. Readers desiring this report can get one for 25 cents plus a self-addressed, stamped envelope sent to Robert J. Bruss, P.O. Box 6710, San Francisco, Calif. 94101.

DEAR BOB: I own a $14,000 mortage note on the house I sold several years ago. Since it only has an 8 percent interest rate, the best I can do is raise $10,500 if I sell it, because the buyer (a mortgage loan shark) wants a discount to raise his yield. How can I raise cash on this note to buy more property? Ollie M., Bowie.

DEAR OLLIE: Offer the note and mortgage as all or part of your down payment on the property you want to buy. If you can sweeten your purchase offer with a little cash (its called lemonading"), chances are your offer will be accepted by the seller.

DEAR BOB: I subscribe to a financial advisory service that says to watch out for real estate price declines. As I own my home and several investment properties, I'm wondering if I should sell out now before the crash comes. Lory T., Laurel.

DEAR LORY: As my 77-year-old mother keeps reminding me, there's big money in forecasting doom and gloom. She knows twice as much about investing as most of those so-called "expert" newsletter writers.

As for real estate market value declines, while there are many buyers who would love to see such price decreases, don't expect big price slashes any time soon. There is so much demand for home buyers and investment property seekers that prices will remain high.

However, there will be temporary, short-term decreases in average prices in some areas, especially for home sales. High mortgage interest rates are the problem. Without easy mortgage money, the pace of homes sales slows down and average sales prices level off.

But don't be misled. I read an article yesterday by a university professor who twisted figures around to try to support his idea that home values were dropping. What was really happening was that more low-priced than high-priced homes were selling, thus skewing the averages downward.

DEAR BOB: I am considering buying property with my cousin. But he has a terrible temper so I want some safeguard so I can get out of the partnership if things don't go well. How can I best do this? Cynthia J., Rockville.

DEAR CYNTHIA: To prevent future problems, have an attorney draw up the partnership papers. Be sure he provides for a buy-out agreement so one partner can buy out the other. The agreement should set a method of establishing the buy-out price, such as by an appraisal of the property value. Without such a buy-out agreement, partnerships often result in legal problems and losses.

DEAR BOB: I've seen some newspaper ads for new homes offering mortgages at interest rates below the "going rate" in our area. How can the homebuilders do this? What's the catch? Mark T., Upper Marlboro.

DEAR MARK: The secret is the builder buys a mortgage commitment from a lender, such as a savings and loan association. He pays the lender a loan fee for the promise that mortgage money will be available for the home buyers.

Generally, for each one point loan fee (one point equals 1 percent of the amount borrowed), the lender drops the interest rate to the borrower by 1/8 percent. Of course, this loan fee paid by the builder is hidden in the purchase price of the homes.