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Jewish World Review Dec. 20, 1999 /11 Teves, 5760

Bruce Williams

Bruce Williams
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Capital gains tax sometimes best -- DEAR BRUCE: My mother, who is 70 years old, owns a piece of property that she inherited when her parents passed away. She is now considering selling it, but does not want to pay a high capital gains tax. What should she do? -- S.M., via e-mail

DEAR S.M.: Unfortunately, there are taxes on gains and they have to be paid. If your mother is to keep the property in her name and pass it on as a legacy, the house would then come to today's stepped-up value. This wouldn't help your mother very much. Another possible plan would be to take out a mortgage on the property. Then, when she passes away, it could be sold at the stepped-up value. But the most logical thing to do would be to sell it for the highest price possible, pay the taxes and let her enjoy the use of the money.

DEAR BRUCE: We just bought a new home with a $130,500 mortgage at a fixed interest rate of 6.63 percent. We plan to pay extra money every month. Can you show us how much we would save in interest by giving different examples? -- T.T., Idaho Falls, Idaho

DEAR T.T.: I think that you are making a huge mistake. Where in the world are you going to find 6.63-percent money? It is a bargain rate, and shouldn't be paid off one hour early.

Whatever money you can afford over the regular mortgage payment should be invested in the financial markets -- possibly real estate or some other investment vehicle. Paying off a cheap mortgage in advance is just not a good move. Bear this in mind: Out-performing 6.63 percent in today's market should be a cakewalk.

DEAR BRUCE: My husband is retired, but I am still working. Our mortgage payments are $730 a month, and we have 17 years left to pay on them. We would like to investigate the possibility of a reverse mortgage. Can you tell me what is involved? -- P.M., via e-mail

DEAR P.M.: Unfortunately, you are not eligible for a reverse mortgage. A reverse mortgage can only be obtained against a property that is free and clear from other debt. While there are several options for reverse mortgages, until such time that you own the property without a mortgage on it, this option is not available to you.

Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).


12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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