QUESTION: I would like to know if I should sell my house and move into an apartment. Here are the facts. I am 75 years old and my sister is 79. We live together in a house that is paid in full. Because of health conditions, I am unable to take care of our yard, or make any repairs to the house, although at present the house is in perfect condition. My sister is very dependent on me and could not live in a house by herself. We have wonderful neighbors, but they should not be burdened with taking care of either of us if something should happen. What advice can you give?

ANSWER: I certainly would recommend selling your house, taking the once-in-a-lifetime exemption for the profit which you have in the house, and moving to an apartment.

I recognize that this is a very difficult decision. You have lived in your house for a long period of time, and probably do not look forward to a move--especially at your age and with your health condition.

But from the brief facts that you outlined in your letter, I think that even you recognize the handwriting on the wall: It clearly is time to move.

You have a lot of equity in your house. It might very well be that you could sell your house, and take back the mortgage yourself, thereby giving you a steady monthly income. For example, if your house is worth approxiSee KASS, E3, Col. 1 KASS, From E2 For example, if your house is worth approximately $80,000, you could require a purchaser to put down $10,000, and you could take back a mortgage of $70,000 bearing interest at the rate of 11 percent and payable over a 30-year period. This would give you a monthly income of $666.63.

Needless to say, since you are in your 70s, you might want to require that the mortgage--while amortized isas if it were for 30 years--becomes due and payable in a shorter time--for example, three to five years. This is known as a balloon note, and you must seek legal advice on the structuring and drafting of a note and deed of trust which that will adequately protect your interests adequately.

As I have indicated, you should take advantage of the once-in-a-lfetime tax exemption which that Congress has made available for senior citizens. If you are at least 55 years of age before the sale of your residential property, and you have owned and used the property as your principal place of residence for at least three years during a five-year period ending on the date of the sale of the property, you are entitled to a maximum exemption of $125,000 on any profit which that you have made in the property. In your case, since because your house is worth $80,000, I suspect that any profit that you have made will be yours to keep, courtesy of Uncle Sam.

You are no doubt are concerned about having to move. I am sure that a satisfactory arrangement can be made whereby your purchaser will give you sufficient time after the settlement in which to move to an apartment. Your contract with a prospective purchaser should read that you have at least three months after settlement in which to move out. Obviously, you will have to pay rent to your purchaser, but this should give you more than enough time to find a suitable apartment for your needs.

In your situation, and with the facts you have given me, I really do not see any alternative but to sell the property and move to an apartment where you will be happier.