Mortgage Paid in Full
By Robert J. Bruss
reprinted courtesy Inman News 4/7/07
Q: DEAR BOB: Next month I will write my final mortgage payment check and want to be sure all the related details of paying off the mortgage go smoothly. What steps should I take? -- Daphne M.
A: DEAR DAPHNE: Congratulations on writing your final mortgage payment check. Phone the lender a few weeks in advance to determine the exact amount of your final payment. (It may be slightly more or less than your regular payment.)
Ask how long the lender usually takes to process a final payment and send you either the deed of reconveyance (for a deed of trust) or a mortgage satisfaction (for a mortgage payoff). This time frame should not be longer than 30 days after the lender receives your payment.
Inquire as to whether the lender will record the document clearing your title or whether it will be sent to you so you can record it in the county where the property is located.
Follow up in 30 days to be certain you received the promissory note you signed years ago marked "paid in full," and make sure the documentation was properly recorded. Lenders have no financial incentive to clear titles promptly, so it's up to you to get it done correctly.
You can hold a symbolic mortgage-burning party, but never burn or destroy your actual mortgage documents. Instead, you might want to frame them.
DEAR BOB: I'm confused about this $250,000 deduction for a house sale. I thought you had to own it for at least 60 months and live in it at least 24 months to qualify. But you recently told a reader he could live in his house for a year, rent it for a few years and then move back in for a year to claim the sales deduction. What does the 60 months refer to? Can I sell my house, get the $250,000 deduction, buy another house, live in it for 24 months, sell it and get the deduction again? -- Anne G.
DEAR ANNE: To be entitled to the principal-residence-sale exemption up to $250,000 (up to $500,000 for a qualified married couple filing a joint tax return), you must own and occupy your principal residence at least 24 of the last 60 months before its sale. The 24-month occupancy time need not be continuous and can be interrupted by rental or non-occupancy periods.
You can qualify if you bought and occupied your principal residence as recently as 24 months ago. This tax break can be used over and over again without limit but not more than once every 24 months.
Sixty months of ownership is not required, with one exception. The only time you must own your principal residence at least 60 months before qualifying for the IRC 121 exemption occurs if you acquired the property as a rental in an Internal Revenue Code 1031 tax-deferred exchange, later converting it into your main home.
Then you must meet the 24-month occupancy test and own the property at least 60 months before qualifying for the exemption. For details, consult a tax adviser.
reprinted courtesy Inman News 4/7/07 www. inman.com
brought to you by Wailea Makena Real Estate Inc.
www.wailea-makena-real-estate.com
Peter Gelsey R (PB)
Wailea Makena Real Estate, Inc.
direct (808) 357-4552
Toll free 800-482-5089
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