Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, June 18, 2006.
DEAR BOB: I gave my tenant the required notice to move, confirmed with a receipt of notice. She agreed to move out. But the unit is now locked, no one is there, and her car is parked in the driveway. I phoned several times, but no reply. What options do I have? I already hired a contractor to update the unit, based on the tenant’s promise to move out on schedule –Paras R.
DEAR PARAS: Please consult a local real estate attorney whose specialty is evictions. I’m sure you have thought of the several possibilities such as the tenant moved out but left the car; abandoned the apartment and the car; passed away either in the apartment or elsewhere; is in the hospital or jail; is avoiding you because she refuses to move out; or wants to drag out the eviction procedure to obtain as much “free rent” from you as possible.
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All these situations have happened to me with my rentals. Ask the neighbors if they have seen your tenant or any activity at the rental. Then contact the local police to learn if they have any record of activity at the property or if they can trace your missing tenant. After that, follow your attorney’s advice to regain possession of your rental unit.
NO STEPPED-UP BASIS FOR GIFT PROPERTY
DEAR BOB: Several years ago, my mother gifted her house to me because she was moving into her new husband’s home in Florida. Now I want to sell that house. But my tax adviser says I am stuck with my mother’s very low cost basis of only $23,000 whereas the house is worth around $375,000 today. At the time of the gift the house was worth about $225,000. Will I have to pay tax on all that capital gain? –Alan P.
DEAR ALAN: Unless the property is your principal residence and you have owned and occupied it at least 24 of the 60 months before its sale so you can qualify for the $250,000 tax exemption of Internal Revenue Code 121 (up to $500,000 for a qualified married couple filing jointly), your capital gain will be taxable.
But the good news is the federal capital gain tax rate is currently only 15 percent. Your tax adviser is correct. The general rule for gifts is the donee takes over the donor’s basis for a property.
HOW TO TRANSFER TITLE TO PROPERTY
DEAR BOB: Last year my husband bought a house in his name on the title and mortgage. But I help him pay the mortgage payments and property taxes. What is the best way for him to transfer to my name 5 percent of the property? How much will it cost? My husband paid a 20 percent cash down payment –Patricia S.
DEAR PATRICIA: If you will only be receiving a 5 percent interest in the property, that means you will probably want to hold title as a tenant in common with your husband who will retain a 95 percent interest. Each of you needs valid written wills to pass your interests upon the death of either of you to whomever you each designate.
Your husband can convey a 5 percent interest in the house to you by a recorded quitclaim deed. The deed should include a legal description of the property, the percent interest transferred to you, the official parcel number, the method of holding title, and his notarized signature so the deed can be recorded. Please consult a local real estate attorney for full details.
The new Robert Bruss special report, “Probate Property Profit Secrets Revealed,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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