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Home inspection by seller is smart move

By ROBERT J. BRUSS Special to the Times
Published January 27, 2007

Q: I plan to sell my home in the next few months. Is it wise to have a professional home inspector prepare a report before I list my house for sale so I can use his findings to help establish the sales price? One sales agent tells me not to do this because, if buyers rely only on his report, I am liable if the inspector misses something. The agent says home buyers in my area usually won't have their own inspection done if I have one available; therefore, I am taking on more liability. What is your opinion?

A: I strongly disagree with that agent. Every home seller should have a prelisting professional home inspection, as well as other customary local inspections, among them inspections for termites, dry rot, energy efficiency, building code compliance, etc.

Then you will know the condition of your home, and you can repair any serious defects before you list the home for sale, or be prepared to disclose them. Savvy home buyers always have their own professional inspections done. Unless you are asked, you don't have to show anyone your inspection reports. Buyers should be encouraged to hire their own inspector after you have accepted their purchase offer.

Proving exemption eligibility to the IRS

Q: You often write about the $250,000 tax exemption ($500,000 for a married couple) that is available when they sell, if they have lived in the home as their primary residence two of the last five years. What proof does the IRS require if eligibility is questioned? How does the seller prove it was the primary residence?

A: Unless the home seller is audited, the IRS requires no proof that the Internal Revenue Code 121 principal-residence-sale requirements were met. If you qualify for the full exemption (up to $250,000 for a single principal-residence seller, or up to $500,000 for a qualified married couple filing a joint tax return), you don't even report your principal-residence sale on your income tax returns.

If the IRS should question your eligibility, you will need proof that the home was your principal residence. Evidence could include utility bills, voter registration, driver's license, income tax returns filed from the residence you sold, bank accounts and nearby employment.

Joint remaindermen going separate ways

Q: I am a joint remainderman with my husband on a farm and house where my mother lives as the life tenant. She can live there until she dies, as long as she pays the taxes; then we inherit the property. I am divorcing my husband and want to know what value my remainder interest has at this time, if any. The property and farmhouse were appraised at $122,000.

A: Until your mother dies, your remainder interest has very little market value. It's hard to sell anyone the right to inherit the property at some point in what may be the distant future. The property becomes marketable only when it passes to you and your husband, the "remaindermen," and you are free to sell it.

Maybe as part of the divorce settlement you can trade your ex-husband something of modest value if he will sign a quitclaim deed to you for his remainder interest in the property. At least that way you will be the sole heir.

You can send e-mail to Robert J. Bruss by visiting his Web site, www.bobbruss.com. Click on "Ask Bob a Real Estate Question." Or write to Robert J. Bruss, 251 Park Road, Burlingame, CA 94010.

[Last modified January 26, 2007, 21:18:57]