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QandA WITH PETER G. MILLER

Timeshares: When Vacation

Property Starts to Get Taxing
Q: I understand that a timeshare can be sold
or given back to the original seller
and the loss from the original price
can be deducted as a tax loss. Is this
true?
A: To start, not all “timeshares”are
deeded real estate – some are club mem-
berships, vacation leases or licenses to
use property.With real estate, there’s
typically no provision that would force a seller to take
back a property after it’s purchased.You should deter-
mine if what you have is actually “real estate”or some-
thing else.
With real estate, you may be forced to pay a capital
gains tax on the profit from the sale of a personal resi-
dence, but typically this does not happen because of
capital gains exclusions for those who reside in a
prime residence for two of the past five years.
However, while profits from the sale of personal real
estate are potentially subject to a tax, there generally is Age-restricted living communities are giving many older adults the freedom of sharing lunch or a bike ride with a companion without the duties of home owner-
no write off for sale losses.As the IRS explains,“the loss ship. Once mainly concentrated in the South, adult living communities now are found all over the country, tailoring to a variety of ages, desires and situations.
on the sale of a personal residence is a nondeductible
personal loss.” For details, please speak with a tax pro-
fessional. Community Living: No Chores, No Bores
Q: We’ve received e–mail that suggests invest-
ing in New Orleans can produce huge profits,
Active adults are choosing homes to fit their busy lifestyles
hundreds of percent per year. Is this true? BY PAT PEREZ Williams, 80, a retired engineer.” I know by lifestyle, community and amenities.They
A: E–mail from folks you don’t know promising vast CTW Features someone is taking care of the chores I always can choose an age-restricted community or
profits,more hair, less weight and lower mortgage rates did.” an age-targeted one, although some develop-
are all in the same category:Nonsense. Older adults, who'd rather forgo tiresome ments bear the description of “55-plus” or

R
obert Williams loves the numerous club-
If huge profits were availabl e ,w hy would anyone house activities that help spark friend- duties required with owning a home but still “active adult.”As the baby boomer popula-
want either your money or your involvement? Instead ships in the neighborhood he and his want an active lifestyle, now find that the tion continues to grow, developers will find
wife,Sally, moved into two years ago. But it's landscape is filled with communities that new and interesting possibilities for a very
of allegedly paying hundreds of percent for the use of the secondary amenities of the age-restricted cater to their varying whims.While the age- demanding segment of the population.
your dollars, the e–mail author could go to a commer- community known as Enclave at Ellicott Hills, restricted communities of the early years Older adults want options, but they also
cial lender and pay a regular level of interest,a far Ellicott City, Md., that really make him smile. concentrated in the Sun Belt states – and want to live among their peers, and that’s
smaller cost for access to capital. O h ,h ow he enjoys the sound of the lawn were surrounded golf courses – today they why these communities are popular.
mower running on a sticky summer morning. exist in the coldest of places often with no "What brings people together in a commu-
Q: We’ve lived in our home for many years and "When it's snowing, I like to lay in bed and
listen to the scraping of sidewalks,” says
fairways in site.
Buyers have a myriad of choices defined
nity is the desire to be around like-minded
will soon move to another state. Rather than sell- See SENIORS Page 2
ing our current house, we prefer to rent. Is there
any place on the Internet where we can get a
standard lease form?
A: Real estate is a localized activity and lease require- Get the Most Out of Your Money with a Buyer’s Agent
ments vary extensively by state, province,county,
BY CHARLES SCUTT dant’s lawyer. home and save more money. to sign an agreement that will
parish and city.In many cases, there is required local CTW Features That scenario is kind of what In an ideal world,“the buyer’s enable your agent to become an
language that must be included in lease forms – lan- it’s like when you’re hunting for agent should represent the exclusive buyer agent.An exclu-
guage rarely used in other places, if at all.As an exam- Imagine being a lawsuit a home but you enlist the help of buyer,” says Glenn Still, president sivity agreement is a contract
ple, one community may require a certain level of plaintiff with an attorney that a real estate agent that is not an of Still Brothers & Associates, that clearly explains the agent’s
interest for security deposits – while other areas have may not show up to court prop- exclusive buyer’s agent. Arlington,Texas.“But a buyer that obligations, the terms of the con-
different requirements or no requirements. erly prepared, if at all.Worse, Ultimately, your best interests wants representation should tract (typically the agreement is
imagine your horror upon dis- may not be well represented. work exclusively with the agent for anywhere from one to six
covering that your attorney is a Consequently, you could miss out they choose.” months) and your responsibility
See ASK OUR BROKER, Page 2 law firm partner of the defen- on opportunities to find a better To ensure this, you will need See AGENT, Page 2

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© 2005 Content That Works – All Rights Reserved • contact us at 866-6CONTENT or CONTENTTHATWORKS.com for licensing information.
 BUYER’S AGENT
CONTINUED FROM PAGE 1
to work with the agent, even if
you find and buy a residence on
your own.
A buyer’s agent can work on
your behalf without a contract,
“but it’s unlikely that he or she
will put forth 100 percent
effort,” Still says.
“Agents help buyers purchase
homes all the time [and] say they
are ‘representing the buyer’ [but]
are not contractually bound to
represent a buyer exclusively,”
says Dale Strack, New Jersey
regional director for Help-U-Sell
Real Estate, Castle Rock, Colo.
“They do a great job, but legally
they can give certain information
to the seller or seller’s agent,
which could work against you.”
An EBA, on the other hand,“is
more likely to work harder on
your behalf to find you the best
house for your money,” Strack
says.“And because your agent
won’t reveal your motivation or
feelings about a house or other
information that may give the
seller or his agent an advantage,
you are more likely to benefit
from the arms-length negotiation
in the price you pay and other
terms of the sale.”
Another benefit to commit-
ting to an EBA is that “the buyer
receives consulting advice rather
SENIORS
CONTINUED FROM PAGE 1
individuals who have had the
same experiences and are in the
same phase of life," says Caryn
Klebba, a spokeswoman for Del
Webb Corp., Bloomfield Hills,
Mich.
Experts say it’s important to
determine one's needs and to
research the market thoroughly.
And don’t just focus on the
amenities. Consider how you will
access health care, public trans-
portation, educational opportuni-
ties and jobs.
A 2005 Del Webb survey
found that approximately 50 per-
cent of baby boomers plan to
purchase new homes for their
retirement, where they can enjoy
lifestyles that allow them to
remain physically fit and socially
active.
The National Association of
Home Builders reported that
while site-built, single-family
attached and detached homes
are still the preferred housing
type, age-qualified multifamily
condominiums have emerged as
a favorite among active adults.
Other trends involve communi-
ties that embrace regional and
ethnic traditions, capitalize on
natural surroundings and incor-
porate design concepts that will
allow people to age in place.
Oftentimes, it’s individual
amenities that make the sell.The
NAHB surveyed potential buyers
and identified the biggest influ-
ence on their decision:
• Walking and jogging trails
© 2005 Content That Works – All Rights Reserved • contact us at 866-6CONTENT or CONTENTTHATWORKS.com for licensing information.
than a sales job,” says Donald J.
Welsh, former broker/owner of
KC Metro Home Finders,
Overland Park, Kan.“If the buyer
does not sign a contract, the
agent has no client liabilities. In
this case, you can be assured he
or she will use strong sales tech-
niques.”
The disadvantage to recruiting
an EBA is that the contract you
must sign essentially obligates
you to purchase a home with
that agent if you buy within the
terms of the contract.
Also, depending on the con-
tract’s fine print, you may be
required to pay a separate com-
pensation fee to the agent if the
seller of the home you purchase
won’t allow it to be included in
the transaction. Usually, the sell-
er’s and buyer’s agents are com-
pensated via a commission,
expressed as a percentage of the
purchase price, paid by the seller
– a cost that is commonly built
into the home’s price tag.
Welsh said another disadvan-
tage is working with an EBA
associated with a broker that
lists homes for sale.“These
agents have commission incen-
tives to sell their own firm’s list-
ings,” he said.“In this case, there
can be many conflicts and no
legal protection under the com-
mon law and agency.”
Before choosing an EBA, be
sure that person has a substantial
were cited by 52 percent of
respondents.The number
increases to 65 percent for those
with annual incomes greater
than $75,000.
• Outdoor spaces, especially
park areas, could influence the
buying decision of 51 percent of
respondent.A park area makes a
bigger difference with house-
holds planning to relocate to a
suburban area than for those
who prefer a rural area.
• Availability of public trans-
portation was cited as a draw by
46 percent of all buyers 55 and
older.The number rises to 61
percent for those 75 and older.
• Open spaces appealed to 46
percent of respondents who
want amenities such as park and
recreation areas, playgrounds,
land set aside by the builder or
developer, and natural undevel-
oped land.
• Lakes appealed to 44 of
respondents.That number
dipped to 37 percent for ages 65
to 74, and 25 percent for 75 and
older.
Many communities fall into
one of two categories: age-
restricted or age-targeted.
Age-restricted communities
don't allow residents under the
age of 19 for longer than a limit-
ed number of days. Older adults
can still factor their grandchil-
dren into the equation when
they’re planning a move. In fact,
the Del Webb survey found that
42 percent of respondents who
plan to move in retirement say it
is extremely important to be
closer to family. Nearly half say
that moving within three hours
amount of experience, as evi-
denced by having done 50 or 60
transactions either representing
buyers or sellers, Strack says.
Most good agents are involved in
an average of nine transactions a
year, while very active agents
often do 18 to 48 a year.
Additionally, no matter whom
you pick, ask that the profession-
al disclose his or relationship as
a buyer’s or seller’s agent up
front.
When it comes to the exclu-
sivity agreement, the best time to
sign it is at the beginning of your
relationship with an agent you
have chosen, Strack says.
Lastly, don’t forget that you
aren’t required by law to commit
to an exclusive relationship with
any agent. In the interests of
proper etiquette and good
karma, however, it’s recommend-
ed that you show loyalty to an
agent that invests a substantial
amount of time and energy help-
ing you shop for a house.
© CTW Features
of family is an important consid-
eration.They do, however, want
to live among their contempo-
raries.
"The idea is that they've raised
their children and though they
love their grandchildren they
don't want to raise someone
else's' children," Klebba says.
Someone hoping to a care for
a grandchild for a year, for
instance, may need to consider
an age-targeted community.
Williams, the Maryland retiree,
says he’s picked a perfect loca-
tion minutes from his grandchil-
dren.When they’re not visiting,
he and his wife turn into social
butterflies.
“We find any excuse for a
party and a dance,” he says.
© CTW Features
Ask Our Broker
CONTINUED FROM PAGE 1
Because you want to get the lease right, and because
you want to avoid needless disputes with tenants, it’s
best to get a current and localized lease form.Sources
include local real estate brokers and attorneys. In addi-
tion, sometimes community groups and government
offices can provide such forms.
However, you also want something more. If you’re
moving to another state you need a local manager for
the property.Otherwise,how do you show the home
to prospective tenants? How do you order repairs?
Q: I’m considering buying a home for my
daughter and son-in-law under the Federal
Housing Administration’s “Kiddie” Condo Loan
Program. In the event they move out of town,
what would be required to remove their names
as co–owners/borrowers from the title and mort-
gage? I want to keep sole ownership of the prop-
erty and continue to make the mortgage pay-
ments.
A: The “Kiddie” Condo Program is the unofficial
name for FHA financing which is used to buy a proper-
ty to be occupied by an adult child but financed by a
parent, relative or someone with a lengthy relationship
to the occupant.
Usually when you have FHA loans that involve non-
occupying co-borrowers the loan amount is limited to
75 percent of the purchase pri c e .H owever,FHA rules
say “maximum financing is available for single unit
properties for borrowers related by blood,marriage or
law or for unrelated individuals that can document evi-
dence of a family-type,longstanding, and substantial
relationship not arising from the transaction.”
If you change the title to the property you effectively
have “sold” it – which means new financing would be
required.
However, if the children move after several years you
can then rent to someone else.Since deductions gener-
ally are awarded according to the proportion paid by
each owner, if you make all payments you then would
get all deductions.
Anytime you have a real estate investment that
involves relatives there are complex issues. Ownership
agreements, for example, should be formal and in writ-
ing to prevent future disputes. For details, speak with a
real estate broker, a tax professional,lenders and an
attorney who specializes in elder law to discuss wills
and living wills.
© CTW Features
Peter G. Miller is the author of “The Common–Sense
Mortgage” and a veteran real estate columnist. Have a ques-
tion? Please write to peter@contentthatworks.com.