QUESTION: My companion, age 67, and I (age 66) have been living together in his house for the last four years. Although we dearly love each other, if we get married we have been told our Social Security and other retirement benefits will be reduced.
However, I am very concerned. His health is declining and it won't be too much longer before we should both move to an assisted living center. If he dies first, his will provides that the house goes to his daughter.
If I can convince him to sell the house, so we can afford to move, I am told there will only be $250,000 tax-free sale profits even though the net profit will be around $400,000. Should my significant other add my name to the home's title to increase the exemption to $500,000?
ANSWER: If you can convince your companion to add your name to the title on the house, to qualify for an additional $250,000 principal residence tax exemption allowed by Internal Revenue Code 121, you must own and occupy the home at least 24 of the 60 months before its sale. However, if you get married, since you already meet the 24-month occupancy test, although your name is not yet on the title, you both can qualify for up to $500,000 principal residence sale exemption if you file a joint tax return in the year of the home sale.
In the current situation, if your significant other dies, and the house goes to his daughter by his will, you get nothing.
Stepped-up basis
I have been following your comments about the benefits of inheriting real estate and other assets because of the stepped-up basis benefits. Does the same result apply to a divorce? My soon-to-be ex-husband has agreed to give me our house in return for not having to pay alimony and child support.
The stepped-up basis to market value tax benefits only applies to inherited property. The stepped-up basis rules do not apply in divorce situations. You will receive full title to the house with the same adjusted-cost basis as before the divorce.
Access ramp
I followed with great interest your recent items about that handicapped Iraq War veteran who had a problem installing a ramp at a rental apartment.
My elderly parents have a similar situation at their condominium in Minnesota. Mom is in a wheelchair. The association allowed installation of a ramp and agreed to maintain it for a year. But I recently learned the association has stopped maintaining the ramp, including shoveling snow in the winter.
Before I take issue with the homeowner's association, I need to know what rights my parents have to make the association maintain the ramp walkway to their ground-floor condo. Who is responsible for maintenance and liability if someone is injured on the ramp?
Although the Americans with Disabilities Act (ADA) clearly requires a building owner, presumably including a homeowner's association, to allow installation of a handicapped ramp at the expense of the disabled individual, the ADA is silent about maintenance of that access. If just your parents benefit from the ramp, I would think they should maintain it. Presumably, if someone is injured using the ramp, the homeowner's association liability insurance provides coverage for negligence. For full details, please consult a local real estate attorney.
Robert J. Bruss is a San Francisco lawyer, broker and nationally syndicated real estate writer. Send general real estate questions to him at Robert Bruss, 251 Park Road, Burlingame, CA 94010, or www.bobbruss.com. He cannot handle individual requests for assistance.
