DEAR BOB: We have about $75,000 equity in our home. Because of business debts, we must sell our home to pay off about $50,000 of overdue bills. However, we understand that if we are to avoid paying tax on our home sale profit we must buy a replacement home of equal or greater cost.

As we are not eligible for that $125,000 "over 55 rule" exemption, is there any way out of our problem? -- Agnes H.

DEAR AGNES: Yes. The "rollover residence replacement rule" of Internal Revenue Code 1034 says you must defer your profit tax when selling your principal residence and buying a replacement principal residence of equal or greater cost within 24 months before or after the sale.

Please notice this law says nothing about having to reinvest any cash received from the sale into the replacement home. In other words, you can sell for all cash and, if desired, buy a replacement home for nothing down such as by using a VA mortgage.

DEAR BOB: We listed our home for sale with a real estate agent recommended by a friend. I don't know much about real estate, but I do know the local agents have a multiple listing service to share information on listings. After several weeks we noticed no agents from other brokerage offices had brought clients to inspect our house.

When we asked, our agent said her firm usually can sell the listings within its own offices, so there is no need to use the multiple listing service. We thought our house would be in the multiple listing service. What should we do? -- Jess L.

DEAR JESS: Shame on your real estate agent for misleading you into thinking your home would be submitted to the local multiple listing service. The MLS is one of the most powerful sales devices real estate agents have and it is shocking your agent isn't using it to get your home sold.

You should know the reason your agent didn't put your home into the MLS is that the agent and her broker earn a bigger commission if the sale takes place within the listing firm. If you were told the MLS would be used, but it wasn't, the agent breached her fiduciary duty to you. The matter should be reported to the state real estate commissioner for investigation and possible revocation of the agent's license.

DEAR BOB: I own a small neighborhood shopping center. One of my tenants, a coffee shop, got behind about six months in rent. When I started eviction the owner filed bankruptcy on me.

Following delay after delay the tenant finally moved out and left owing me 11 months of rent and I probably won't get even $1 from the bankruptcy court. I just thought your readers who own rental property should know it doesn't pay to be nice to tenants because they will take advantage of you like mine did. -- Gus V.

DEAR GUS: Thank you for sharing that sad story. I also have learned the hard way that it doesn't pay to be nice to tenants who can't pay their rent. The most I let a tenant get behind in rent is 30 days, but usually I begin eviction within 15 days after the rent was due.

DEAR BOB: We are having trouble selling our home, which has been on the market almost nine months. The asking price is reasonable, based on an appraisal of our home when we put it up for sale.

We tried listing it with a real estate agent, but she was totally incompetent, so we fired her after about 45 days. Each weekend we hold an open house, which we advertise in the newspaper. Since the location is good, we have lots of lookers, but have not had any offers so far.

My wife says we should wait to sell, but I want to get it over with, so we can move to Florida by winter. Why doesn't our home sell? -- Rudy S.

DEAR RUDY: The reason your home hasn't sold is that you are doing everything wrong. It sounds like you are just testing the market and are not highly motivated to sell unless you get your price, which is based on a possibly outdated appraisal. By trying to sell your home alone without a professional real estate agent you are at a severe disadvantage.

Your first step should be to take down the "for sale by owner" sign. Look at your house critically. Get it into top condition. If it needs repairs, painting or cleaning, get the work done. New carpets and fresh landscaping also can be very profitable.

The next step is to invite at least three real estate agents who have recently sold homes in your neighborhood to inspect your home and give their listing presentations. Each agent should give you a written "comparative market analysis" form showing recent sales prices of similar nearby homes, asking prices of comparable neighborhood homes now listed for sale -- your competition -- and the agent's recommended price for your home.

Ask each agent for the names and phone numbers of their most recent home sellers. Then phone those sellers to inquire if they were in any way unhappy with the agent and if they would list their home for sale again with the same agent. You will soon know which agent should get your listing.

If you are serious about selling your home you need all the help you can get from a professional agent. In the current buyer's market in most cities you need the powerful multiple listing service to expose your home to as many prospective buyers and other agents as possible.

You only have one home to sell, but it's hard to compete with the local multiple listing service that has hundreds of homes available and dozens of agent members.

DEAR BOB: We just sold our condominium and are overjoyed at finding a buyer after having it on the market for almost six months. Our profit is about $70,000, including the deferred gain from the sale of our previous residence that we sold about six years ago. But we are receiving conflicting information on that "over 55 rule" $125,000 tax break.

Since we are buying a town house that costs just a little more than our condominium's sales price, our tax adviser says we can roll over our profit and not pay any tax on our sales profit. But a friend says we should use the $125,000 exemption now because Congress might take that tax break away. What do you advise? -- Erv W.

DEAR ERV: If Congress takes away the "over 55 rule" $125,000 home sale tax exemption every U.S. senator and representative would have the wrath of the powerful American Association of Retired Persons to contend with and surely would be defeated at reelection time. This is one of the safest tax breaks and there is no talk of abolishing it.

However, since you are buying a replacement principal residence of equal or greater cost within 24 months before or after the sale of your old residence you are eligible for the "rollover residence replacement rule" of IRC 1034 that is available to home sellers of any age.

Therefore, you can save your once-per-lifetime $125,000 home sale exemption for future use. Your tax adviser wisely suggested you use this major tax deferral.

DEAR BOB: I work in a large office. One of my co-workers has a part-time job where she sets up biweekly mortgage plans for homeowners. She showed me how I can cut my 30-year mortgage down to about 20 years and save thousands of dollars of interest. Her company will convert my mortgage into a biweekly loan and a national bank will automatically withdraw a loan payment from my checking account every two weeks. It will cost me $475 to set up this program. Do you think it is worth it? Is this plan a scam? -- Hans J.

DEAR HANS: Why pay someone else to do something you can do for yourself? There are many biweekly mortgage conversion programs being marketed by various organizations. It is true you can save thousands of dollars by paying off your 30-year mortgage as if it were a 20-year mortgage. Better yet, if you can afford the increased payment, you could pay off your mortgage in 15 years and save thousands of dollars more.

To illustrate, suppose you have a $100,000 home loan for 30 years at 10 percent interest with a $877.58 monthly payment. If you want to pay off that loan in 20 years, increase your monthly payment to $965.03. However, if you prefer to pay off the mortgage in 15 years, the monthly payment will be $1074.61 or almost $200 per month more than you are now paying. The savings will be thousands of dollars.

But you don't need your co-worker's help to do this. Just ask your lender how much you need to increase your monthly payment to pay off your mortgage in the number of years you desire.

The idea behind the biweekly mortgage plans is that you make 13 monthly payments each year instead of 12, thus paying off the loan in just over 20 years. But why pay someone $475 to set up the plan and let a bank earn huge profits on your money while it is being accumulated for the 13th payment? Since your mortgage is not really converted into a biweekly loan, the bank that withdraws money automatically from your account profits handsomely while holding your money.

Is this a scam? Probably not. But in my opinion you don't need to pay $475 to your co-worker. All you need to do is increase your monthly payment, with that extra amount reducing your mortgage principal balance, to pay your home loan off more rapidly.

DEAR BOB: My husband and I have decided to buy and fix up run-down houses in our city. He retired a few months ago and is already tired of playing golf every day. Since our area has many run-down houses that we can buy and rehabilitate, we think this will be the perfect investment for us. Do you think we should form a corporation to limit our liability? -- Marge H. DEAR MARGE: No. There are many drawbacks of corporate ownership of real estate, especially for small investors. Taxwise, you won't be able to enjoy all the tax deductions available to individual investors. As for limited liability, just carry a $1 million or more umbrella liability insurance policy, plus liability coverage on each property, of course.

There is no more satisfying and profitable activity, if you do things right, than fixing up run-down houses. Incidentally, an outstanding book to read on how to fix up houses is "Housewise" by Suzanne Brangham, available in stock or by special order at local bookstores. Brangham is a very classy lady who enjoys getting in her overalls, wielding a paintbrush and climbing a stepladder to fix up her properties.

DEAR BOB: I would like to invest in real estate, but don't have the time to deal with tenants. A local real estate broker has a plan whereby she will match an investor (such as me) who puts up the down payment with a resident who will make the monthly payments. We will split the profit in five years when the house is sold or refinanced. It sounds too good to be true. Is it? -- Miriam H.

DEAR MIRIAM: Yes. Home equity sharing is authorized by Internal Revenue Code 280A. Both the nonresident investor and the resident co-owner must be on the title if they are to receive income tax deductions.

The nonresident rents their share of the home to the resident who gets to deduct their portion of mortgage interest and property taxes on their share of the home. The co-owners agree after five or 10 years the property will be sold or refinanced with a split of the profits.

This sounds like a good deal for both parties. It usually works very well between parents and their adult children where everyone knows and trusts each other.

However, among strangers equity sharing can lead to trouble. For example, suppose the resident co-owner quits making payments due to unemployment, illness, or divorce. How do you, the nonresident co-owner, get rid of a deadbeat co-owner? Since you can't evict them, if they resist you will wind up in court. Some equity sharing companies recommend pre-signed quit claim deeds or other devices, but they won't work if the resident co-owner gets a lawyer and fights to claim part of the equity.

I would like to be more positive about equity sharing. But I've heard too many horror stories to be enthusiastic except between parents and their adult children where everyone has a family obligation to perform the equity sharing contract as agreed.

DEAR BOB: Last month I sold my fourplex. Then I read your article about Starker delayed exchanges authorized by IRC 1034(a)(3). Since I have a sale profit of almost $90,000, how can I do a Starker exchange to avoid paying tax? -- Lyman W.

DEAR LYMAN: It's too late. You have already received the sales proceeds, so the profit is taxable to you. Instead, you should have had the buyer's money received by a third-party intermediary, such as a bank trust department. For further details, consult your tax adviser.

Recently a delayed-exchange accommodator in San Diego allegedly absconded with up to $10 million of funds from delayed exchangors. When dealing with third-party delayed exchange intermediaries be sure the money is held by a bank trust department or other financially stable firm.

DEAR BOB: I am thinking of buying a house with my best friend. We went to college together, both are bachelors and have no immediate prospects of marriage. But we realize it is stupid to waste money on rent. We can each put up $20,000 for a down payment on a house we will buy together. It will be a very nice bachelor pad. However, if one of us should get married or have an out-of-town job transfer, how should we provide for either selling the house or the remaining co-owner to buy the other out? -- Brett R.

DEAR BRETT: Taking title as tenants in common is not enough. In addition, you need a contract that provides for contingencies such as a buy-out agreement or the possibility one co-owner must sell, but the other cannot afford to buy him out. Consult an experienced real estate attorney who will draw up a co-ownership agreement to provide for the possible problems that might arise.

DEAR BOB: I am a 62-year-old widow living in a $225,000 free-and-clear house that I dearly love. But my lifestyle is limited, since I only have Social Security plus a small pension from my late husband. I realize it is not smart to sit on $225,000 of idle equity while I can barely make ends meet, but I don't want to sell my house.

I have looked into those reverse mortgages very carefully because I need about $1,000 per month additional income. However, after checking out several reverse mortgage plans, I don't feel comfortable with any of them. I think they are trying to take advantage of the old people. What is your opinion and why are there so few reverse mortgage lenders? -- Ruth G.

DEAR RUTH: I am equally skeptical. Quite frankly, none of the reverse mortgage companies has a well-known name. The major banks and S&Ls should have gone into the reverse mortgage business long ago. Reverse mortgages also are ideal for insurance companies and credit unions. All I can suggest is you investigate very carefully before taking out a reverse mortgage.

DEAR BOB: I do not have a large enough down payment or enough income to buy a single-family house. However, I can handle either a condominium or a town house. Which do you think is better? -- Trish A.

DEAR TRISH: A town house has much more potential to appreciate in market value than does a condo, assuming each is located in an equally attractive complex. Town houses are very similar to houses, so they appeal to large numbers of prospective buyers. However, condos have limited buyer appeal. I've never yet met anyone who wants to buy a condo when he or she grows up, but most people someday want to own a house, and a town house is close enough for most prospective buyers.

Readers with questions should write Bruss directly at P.O. Box 280038, San Francisco, Calif. 94128.