'Significant' Changes to the Title

Q: DEAR BOB: My companion, age 67, and I, age 66, have been living together in his house for the past four years. Although we dearly love each other, we have been told that if we get married our Social Security and other retirement benefits will be reduced. However, I am 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. I am told that if I can persuade him to sell the house, so we can afford to move, there will be only $250,000 tax-free profit 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? -- Helen R.

A: DEAR HELEN: If you can persuade 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 two lovebirds 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 a principal residence sale exemption of up to $500,000 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. I'm sure you are aware of that. For more details, consult a local estate planning lawyer or tax adviser.

DEAR BOB: I have been following your comments about the benefits of inheriting real estate and other assets because of the "stepped-up basis" for tax purposes. 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. -- Inga T.

DEAR INGA: Stepped-up basis applies to only inherited property. That is why I frequently advise that it is better to inherit property than to receive it as a pre-death gift.

The stepped-up-basis rules do not apply in divorces. You will receive full title to the house with the same adjusted-cost basis as before the divorce.

For details, please consult a tax adviser.

DEAR BOB: 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 that was otherwise ideal for him. I'm glad the story had a happy ending. By eliminating the steps, it sounds as if the landlord's building is made more desirable for everyone. My elderly parents have a similar situation at their condominium. 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 homeowners association, I need to know what rights my parents have to make the association maintain the ramp to their ground-floor condo. Who is responsible for maintenance and liability if someone is injured on the ramp? -- Edward N.

DEAR EDWARD: Although the Americans With Disabilities Act clearly requires a building owner, presumably including a homeowners association, to allow installation of a handicapped ramp at the expense of the disabled individual, the law is silent about maintenance of that access.

If only your parents benefit from the ramp, I would think they should maintain it. Presumably, if someone is injured using the ramp, the homeowners association liability insurance provides coverage for negligence. For details, consult a local real estate lawyer.

DEAR BOB: Lately you have had several questions about life estates and "waste." I am a life tenant, but I struggle to pay the property taxes. I am now behind and fear the property tax collector will try to sell my house because I can't pay the taxes. It seems to me the person who will inherit the house when I die or move out should pay the property taxes, but I know that is not the law. What should I do? -- Irene W.