Accountant can help determine the liability on condo sale |

Accountant can help determine the liability on condo sale

DEAR BRUCE: My mortgage is paid off on a condo I’ve rented since 1991. I purchased it for $42,000 and it’s worth $150,000. I was considering selling the property to the tenant over a 5-to-8-year period. Would this help me avoid a giant capital gains hit all at once?

I’m 67 years old and have healthy retirement savings, so minimizing taxes is still important. Do you have any ideas on the best (cheapest) way to set up that kind of sale without having a bank in the middle? — J.W.

DEAR J.W.: I would suggest that you talk to an accountant (one who is knowledgeable in real estate) and show him all the records on the transaction. Whether or not you’ll have any substantial taxes that must be paid is something the accountant can help determine. If, for example, you put capital improvements into the property, no matter how long ago, these will be deductible against any possible gain.

As to selling the property to a tenant, I can’t believe there is any advantage to that over selling it outright and paying the taxes. As to not involving a bank, if the buyer is going to finance it, there has to be a bank or other lender involved somewhere. That really shouldn’t be any concern to you.

DEAR BRUCE: Is voluntarily surrendering your vehicle better than having it repossessed? — R.B. Via Email

DEAR R.B.: No matter how you slice it, it sounds like you’re in trouble! You didn’t say that you don’t have the money to pay for the vehicle, which is financed. Assuming you don’t, you can make a case for not paying and hanging onto the car for as long as you possibly can. That would buy you probably a couple of extra months of having the car without making a payment. If you have no access to another vehicle, I would continue not to make the payment. Send letters explaining the circumstances and stall until the car is repossessed.

DEAR BRUCE: Our father died, leaving us $500,000 in a trust. I tried to get information about the trust’s dwindling funds. I went to court and lost. The judge gave the administration of the trust to a single local attorney.

We have been enjoined from contacting this attorney. He is draining the trust’s money rather than hiring a real estate agent to sell our father’s $499,000 home, which is deteriorating fast. Short of hiring a real estate attorney, where do we go from here? — S.S.

DEAR S.S.: Unhappily, you’ve done what you can, and so far, you have failed. I can’t think why the judge would give the administration of the trust to an attorney and then allow him to just sit there and not do anything to turn the property into cash. I know it’s a tough proposition, but I would swallow hard and get that attorney hired.

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DEAR BRUCE: I’m 74 years old. My assets amount to $2 million with a cost basis of $1.2 million and yielding an overall 4 percent. I have a Roth IRA consisting of equities and corporates valued at $450,000 and $140,000 in a five-year CD yielding 1.6 percent. Other assets are a rental house valued at $150,000 and two homes at $750,000. I keep an average of $200,000 cash in my checking account. My Social Security income is $15,600 annually.

I’m tired of market swings, record-keeping and tax returns. If I liquidate everying except one personal residence of $400,000, I’d come out with about $3 million in cash after capital gains taxes. If I just put the cash in non-interest accounts spread among banks to keep it FDIC-insured, I could pull out about $100,000 a year for expenses (more than enough) and have enough to last till I’m 104.

It is unlikely I’ll live much past 85, due to family history and open heart surgery. I’d have little record-keeping, total security of principal, no market worries and no tax returns. Ultimate simplicity and security of principal is my goal. — D.W.

DEAR D.W.: I think a lot of people would love to have your problem. I understand you don’t want to keep any records; you can certainly hire a CPA to handle that and make the payments, and come out better than accepting little or no interest out of $3 million.

Let’s assume that you can invest the money in the marketplace and get an average of 5 percent, which is not an unrealistic number. That would give you $150,000 a year in income, which would exceed your cost of living. I understand you don’t want the headaches and you feel that you could live on what you have, but one never knows in terms of illness, etc.

I would strongly suggest that you put your problem in front of two or three investment counselors. Compare their costs and their track records. I certainly wouldn’t throw away $150,000 a year.

Send questions to Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided. The Bruce Williams Radio Show can now be heard 24/7 via iTunes and at It is also available at end

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