DEAR BOB: You say we're in a "buyer's market" for homes now. Does that mean it's not a good time to sell? We want to buy a larger home in a better neighborhood. If we make a purchase offer, how can we protect ourselves to be sure we can get our old home sold to give us enough cash to buy the new home? Or should we wait? Dolores Van Z., Annapolis.

DEAR DOLORES: Be realistic. If you expect to unlock all the equity from your old home to produce cash with which to buy your new home, that's highly unlikely. The reason is mortgage money is scarce and very expensive. However, you can structure the purchase of your new home so you won't have to make an all-cash sale of your old home.

For example, suppose you are buying a $100,000 home and selling a $75,000 home. You could provide in your purchase offer for the $100,000 home seller to accept as your down payment the cash you receive from your home's sale plus any secondary mortgage financing you have to carry back from your buyer. In other words, if you sell your home for $15,000 down payment and take back a second mortgage, that $15,000 plus the second mortgage becomes your down payment on your new home.

In today's buyer's market, sellers who are selling their homes are offering attractive financing. The unsold homes are usually offered by unrealistic sellers who are dreaming of an all-cash sale. Smart real estate agents work with the motivated sellers who will help finance their buyer's purchase. You can do this and still accomplish your goal of moving to a better neighborhood and better home.

Today is the best buying opportunity we've had in years. Sellers are getting motivated, realty agents are always motivated, and it's great time to be a home buyer. It's also a good time to sell a home if you structure the sale to help your buyer buy.

DEAR BOB: Do I correctly understand that if I sell an investment property, the long-term capital gain tax is 40 percent of my profit? Rich M., Bowie.

DEAR RICH: No. That's a common misunderstanding.

Only 40 percent of the profits from the sale of property owned over 12 months, called long-term capital gains, are taxable. The other 60 percent is tax-free. The taxable 40 percent is added to your other ordinary income and taxed at regular rates. Depending on your income tax bracket, the long-term capital gain tax rate ranges from 7 percent minimum to 28 percent maximum as a percent of your sale profit.

For example, suppose you are in a 30 percent income tax bracket and have a $10,000 long-term capital gain. Only $4,000 is taxable; $6,000 is tax-free. The $4,000 is added to your ordinary income. The tax would be 30 percent of $4,000 which is $1,200. As a percentage of your $10,000 gain, that is only 12 percent. This is another advantage of realty profits.

DEAR BOB: Recently, you referred to a new type of property trade called a tax-deferred "Starker 'delayed' exchange." Please explain how this might work as we own a three-family house we want to trade for a commercial building. Can this be done without paying taxes? Jess H., Alexandria.

Dear jess: Yes. Let's start with the tax-deferred exchange, as authorized by Internal Revenue Code section 1031.

Such a property swap must involve two or more "like-kind" properties held for investment or use in a trade or business. In shorthand, that means any property except your personal residence. To qualify for tax-deferral, you cannot receive any "unlike property," called "boot," which is usually cash or net mortgage relief.

In other words, it's a tax-deferred exchange if you trade up to a larger property, held for investment or use in a trade or business, if you don't receive cash or net mortgage relief.

A "Starker 'delayed' exchange" means a sale with the proceeds held in a trust arrangement until the second property can be acquired to complete the swap. However, the IRS refuses to abide by the Starker decision of the U.S. Court of Appeals so you can expect IRS difficulty unless your Starker exchange is properly documented. Always use an experienced real estate attorney when attempting a Starker exchange.