Q: My ex-husband and I own the house I live in. He has remarried and lives in another state. I've been paying on the mortgage for the past 17 years. I want our daughter to be a part-owner of the house. I've asked my ex-husband to deed his share of the house to our daughter. He refuses. How can I make our daughter a part-owner?
A: You and your ex-husband own the house as tenants in common. You can deed all, or any part you wish, of your share of the house to your daughter. If you want to establish just how large a share of the house you own, you'll probably have to file an equitable action (or its equivalent) in a court of competent jurisdiction. This is because you've been paying on the mortgage for 17 years, and, at the same time, you've been living in the house. The court will have to determine your net ownership. For details, consult your attorney.
Q: My wife and I are over 55 years old. Twenty years ago we bought a "principal residence" for $50,000. Today we can sell it for $250,000. We want buy a condominium for $100,000 and move into it. We know that $100,000 of the gain on the sale of our house can be excluded from our gross income on a one-time, elective basis.
Can we use this exclusion and also allow our remaining profit to be offset by the purchase of the $100,000 condominium? Then can we escape paying tax since the cost of our new residence will equal the adjusted sales price of our old home? If we go through with these transactions, is there any requirement of sale before purchase or purchase before sale to get the maximum benefit?
A: According to Internal Revenue Regulation 1.121-5 (g), you can use your $100,000, one-time, elective exclusion in addition to the nonrecognition of gain when the purchase price of your new home equals or exceeds the adjusted sales price of your former house. So, using your figures above, you'd have no tax to pay. You must buy and occupy your new home within 18 months before or after the sale of your former one.
Additional time is allowed if you build rather than buy an existing home; (18 months to begin building, two years to occupy your new home). Additional time is also allowed if you are on active duty in the U.S. Armed Forces or have your "tax home" "where you live and work) outside the United States; (up to four years after you sell your former home, in certain circumstances).
You'd be wise to get professional advice to make certain you're meeting all the requirements of the one-time exclusion and the nonrecognition of gain provision.
Q: I have heard that if a previous neighbor inadvertantly erected a fence slightly over the property line, a court is not interested. Is this so? f
A: Whether the court is interested, as you put it, depends on a number of factors. Among them are (1) how far over the property line the fence is positioned, (2) how long it has been there, (3) whether the owner on whose land it's positioned knows it's on the land and has acquiesced in it.