QDEAR BOB: I am 84 and in excellent mental health, though my body is declining. For the past two years I have lived in an assisted-living center. My son insisted I move here and I am happy with the care I receive. The only problem is my house. When I moved out, my son rented it to a couple and their rent pays most of my bills. They visit me every month or so to beg to be allowed to buy my house. Last month, they brought their baby daughter to visit, too. My son says if I sell my house to them, I will have a capital gain tax to pay. He says because I no longer live in the house, I cannot qualify for that $250,000 home sale tax exemption you often discuss. Is that true? -- Naomi R.

ADEAR NAOMI: Internal Revenue Code 121 entitles you to a principal residence sale tax exemption up to $250,000 (up to $500,000 for a married couple filing jointly). To qualify, you must have owned and occupied your principal residence any 24 of the 60 months before its sale. You appear to qualify.

The property need not be your principal residence at the time of its sale. You can rent it to tenants for up to three years after moving out and still qualify, as explained above. You had better get busy to complete the home sale while you still qualify for the $250,000 tax exemption.

DEAR BOB: I will soon be leaving my job to become a real estate agent. Some time ago, you recommended a book for new real estate salespeople. But I failed to write down the title. What book should I read? -- Nicholas H.

DEAR NICHOLAS: There are several excellent books for real estate sales agents that I have reviewed within the past year: "Double Your Income in Real Estate Sales, Third Edition" by Danielle Kennedy; "Complete Idiot's Guide to Success as a Real Estate Agent" by Marilyn Sullivan; "The Millionaire Real Estate Agent" by Gary Keller; and "Real Estate Agent's Field Guide" by Bridget McCrea.

DEAR BOB: My late husband left me a life estate in one of our two homes. My estate attorney seems unsure how a life estate should be valued. Any information would be appreciated -- Elaine C.

DEAR ELAINE: I don't understand why you need to value your life estate in the home. Most life estates aren't worth much. The reason is, when you die, your life estate terminates. To be blunt, if you get hit by a truck while crossing the street, your life estate ends and becomes worthless.

If you want to sell your life estate, buyers are almost nonexistent unless they can also buy the interest of the remainderman who receives full ownership of the house after you die. Life estates aren't worth much, except to a life tenant such as you who can enjoy the property as long as you want to live in it.

DEAR BOB: My father died five years ago, leaving 72 acres to his five daughters. For the past three years we have been working with a realty agent to sell the property. Last March we signed a sales contract for $190,000. The buyer found that a thin strip running through the property belongs to the power company. We reduced the price by $7,500. Next, he wanted a $1,000 reduction for a defective septic system. The buyer's wife is the real estate agent handling the sale and she let him start bulldozing the property. Our lawyer says no matter how outraged we are we shouldn't do anything to impede the closing. What should we do about the buyer occupying and bulldozing our property before the closing?

-- Pat M.

DEAR PAT: If you file a lawsuit against the buyer or the real estate agent for damages, it will be difficult to prove any loss. And you won't get rid of that property and receive your money. I suggest you get the sale closed. After the closing, when you have your money, you might want to file a complaint about that real estate agent with the state real estate commissioner for violation of her fiduciary duty to you.

DEAR BOB: I rent a house in a quiet neighborhood. My landlord decided to replace some landscaping. She has been coming over, unannounced, by herself or with landscapers. My family uses the yard for kids to play. I am upset our privacy is being invaded for beautification we did not request. While we're paying rent for the house, doesn't our space include our yard? We're moving out in two months when our lease expires. Can we stop our landlord from further landscaping? -- Zoenda McI.

DEAR ZOENDA: When you and the landlord signed the lease, as the tenant you became entitled to exclusive possession of the rented house and its yard. The landlord is entitled to inspect the property without advance notice only in the event of an emergency, such as a fire or a broken water pipe.

Otherwise, the landlord must give you at least 24 hours' notice. However, if the landlord's frequent inspections of the grounds are unreasonable, you do not have to consent.

When the landlord shows up unannounced, your appropriate remedy is to refuse admittance and phone the police to report a trespasser if the landlord enters your rented premises without permission, since you don't want any landscaping work.

DEAR BOB: We have tenants living in our house and their lease ends Oct. 1. We are moving back to the area and would like to live in our home as of Aug. 1. Since it's my house, can I give my tenants notice to move out as of Aug. 1? -- Claudia S.

DEAR CLAUDIA: You must wait until the tenant's lease expires on Oct. 1. However, you could politely ask the tenants if they would like to move out early. If that doesn't work, you can encourage them to move out early, perhaps by payment of $1,000 or $2,000 in moving money.

DEAR BOB: When my husband and I bought the lot where we built our home, we asked the developer what was going to be built in back of our house. He said he didn't know. It turns out a Wal-Mart was built adjacent to our home. We are living in a nightmare. All night long there are noisy delivery trucks. It is almost impossible to get a good night's sleep. I've talked to the mayor, city attorney, planning manager, etc., but they refuse to help us. What can we do? -- Darolyn B.

DEAR DAROLYN: The situation you describe is legally a private nuisance because it affects only you and perhaps a few neighbors.

If you can prove the late-night noise would disturb normal people, you may have a cause of action against Wal-Mart and the shopping center property owner for damages. Your situation is much like a neighbor's barking dog that howls all night, disturbing your sleep.

DEAR BOB: After reading your articles, I am convinced of the living-trust benefits for owning my properties and avoiding probate. My son and I have jointly owned a residential property for 10 years. I have advised him that we will both sign a deed to transfer title to the living trust. My son and daughter will be the beneficiaries of the living trust. Will they now inherit the rental property with a stepped-up basis on the date of my death to avoid capital gains tax? -- Don F.

DEAR DON: No. If you die first, presuming you and your son are equal co-owners, your surviving son will receive a 25 percent interest in your share of the property and your daughter will receive the other 25 percent from you. The basis on your half of the property will then be stepped up to market value on the date of your death.

Your son's adjusted cost basis for his 50 percent of the property will remain unchanged. A living trust has no effect on the stepped-up basis rules for the beneficiary or for existing co-owners such as your son.

There are two primary living trust purposes: avoid probate costs and delays when a property owner dies; and provide for management of your assets by the successor trustee if you become incapacitated, such as by a severe stroke or Alzheimer's disease.

DEAR BOB: My downstairs was flooded, and I had to move to a hotel. My insurance paid for the hotel and all the damages to my home. What type of paper can I file to prevent a mechanics' lien? -- Thelma M.

DEAR THELMA: If all the repair bills were paid, you don't have to do anything. The repair contractor cannot record a mechanics' lien against your property if your insurance company paid his bill in full.

The only reasons a mechanics' lien can be recorded against a property are for non-payment of a general contractor or a sub-contractor, unpaid construction employees (that rarely happens), and a material supplier who was not paid (often called a materialman's lien).

If you were given the check from the insurance company, and you are expected to pay the contractor and suppliers, before you do so be sure to get a written release of lien or other proof the suppliers and subcontractors have been paid in full.

DEAR BOB: Is it possible to use individual retirement account funds to put a down payment on a rental house without suffering adverse tax consequences? -- LeRoy G.

DEAR LEROY: To use IRA funds for buying real estate, you need an IRA trustee who allows you to self-direct your IRA investments. You also need to take title within your IRA. This usually isn't practical for most IRA holders. However, if you have a Roth IRA, that's a different story. Good Web sites on this topic are www.entrustadmin.com (Entrust Administration), www.sterling-trust.com (Sterling Trust Services, and www.midoh.com (Mid Ohio Securities).

DEAR BOB: About six years ago, my three siblings and I inherited our father's four properties, which are in two states. All the properties are rented and producing income, but we now want to sell these properties. The problem is we can't find one sister. Last we heard, she is living in India with a religious group. My brother made an unsuccessful trip to India to find her. She hasn't communicated with any of us or her college or high school friends for at least five years. The last we saw her was at our father's funeral where she seemed rather spaced out. How can we sell these properties without her presence? -- Ruth R.

DEAR RUTH: I will presume title to the four properties was conveyed by your father's estate in probate proceedings to the four siblings. Because the three available siblings want to sell, it appears you will need a court partition sale order allowing the property sales. Because the properties are in two states, it will be necessary to obtain court partition orders in both states so the properties can be sold and the sale proceeds divided among the four owners. The share for the missing sister can be held in trust until she either reappears or is determined by a court to be dead.

DEAR BOB: We recently refinanced our home with a 10-year interest-only mortgage at 6 percent. As our credit scores are not perfect, we didn't have much choice. This is a big improvement from the 7.5 percent interest rate we were previously paying. Do you think we made a mistake obtaining an interest-only mortgage?

-- Ken R.

DEAR KEN: No. You got a good interest rate, considering your credit scores, and interest-only payments are rock bottom with fully tax-deductible interest.

Most homeowners build far more equity from the market-value appreciation of their homes than they do from gradually paying down the mortgage balances on amortized loans.

If you plan to keep the home forever, the terms of your mortgage probably allow you to make additional monthly payments to be credited toward principal reduction. But there is no need to make principal payments on your interest-only mortgage if you don't want to do so.

DEAR BOB: I am 64 and my husband is 78 and we are retired and in need of more retirement income. When we looked into a reverse mortgage, which you often discuss, the lender's representative said we could receive much more income if my husband is on our home title alone. So I signed a quit claim deed. As a result, our monthly reverse mortgage income has allowed us to go from paupers to living comfortably. But I am told that if my husband signs a quit claim deed to me for a 50 percent interest, then the reverse mortgage comes due. Is this correct? -- Patricia T.

DEAR PATRICIA: Check with your reverse-mortgage lender for exact details. When your husband dies or moves out of the home for more than 12 months, the reverse mortgage principal and interest matures and becomes due.

The reason is the reverse mortgage is based on his age and life expectancy at the time it was originated. When he dies or moves out permanently, presuming you survive him, you could either refinance the house or sell it to pay off the reverse mortgage balance.

DEAR BOB: There is a vacant lot next to our house we want to buy. Our purpose is to build a modest house for my wife's mother so she will live nearby but not in our house. But we can't find the owner of the vacant lot. Title is held in a trust that appears to be managed by an out-of-town bank. My letters and phone calls produce no results. The property taxes haven't been paid for 16 months. How can we locate the lot owner so we can negotiate a purchase? -- Neil W.

DEAR NEIL: Until you find the owner, there's nobody to convey title to you because the bank trustee can't act without the approval of the trust beneficiary.

One approach I used years ago to get the attention of a bank trust department was to deliver a client's purchase offer on an apartment building with a $10,000 deposit check to the bank trustee. As a fiduciary, the bank had a legal duty to deliver my client's purchase offer to the property's owner.

Eventually, after about six months, my client bought the property held in the trust. But until that purchase offer was made, bank trust department wouldn't even disclose the name of the trust beneficiary. The same technique might work for you.

DEAR BOB: My wife died in April 2005. If I decide to sell the house where we lived together almost 50 years, can I qualify for a $250,000 or $500,000 tax exemption? I am receiving conflicting answers.

-- Fred W.

DEAR FRED: If the house was the principal residence for both you and your late wife, if at least one of you held title, and if both spouses occupied it at least 24 of the 60 months before its sale, then you can qualify for up to $500,000 tax-free capital gains if the sale closes by Dec. 31, 2005. That's because 2005 is the last year you and your late wife can file a joint income tax return.

However, don't rush to sell by the end of 2005 if you don't want to. If your wife's name was on the title, and if you inherited her half of the house, then you receive a new stepped-up basis to market value on the date of her death for that half. If the house was community property, then as the surviving spouse inheriting her share you get a 100 percent stepped-up basis.

Readers with questions should write Robert J. Bruss at 251 Park Road, Burlingame, Calif. 94010, or contact him via his Web page, www.bobbruss.com.

(c) 2005, Inman News Service