By David W. Myers
Cracking or splitting can be a telltale sign that a wood roof is drying out. Repairs could be costly.
Dear Mr. Myers: We have owned several homes before, but all of them have had tile or composite roofs. Now we are considering the purchase of a house with a wood roof. We haven't had the home inspected yet, but we can see that some of the wood shingles appear to be splitting. Is this normal wear and tear, or is it something we should worry about?
Answer: Cracking or splitting can be telltale signs that a wood roof is drying out, a process that will only worsen as time goes by. Such deterioration can create all sorts of problems, from leaks to mold or dry rot.
If you decide to make an offer on the property, make sure it's contingent on obtaining a satisfactory report from a company that specializes in roof repairs. The report might help you to negotiate a lower price with the seller if a lot of work needs to be done, or alternatively cancel the offer and get your deposit back if the seller refuses to make any concessions.
Dear Mr. Myers: My father died in 2003, and my mother passed away earlier this year after a long illness. Their home was mortgaged to the hilt to pay their medical bills, and they didn't have a lot of other assets. I am their only child, and they left everything to me, but I don't want to hassle with their house or go through the probate process. Would it be possible for me to simply reject their bequests?
Answer: Yes, you can refuse to accept anything or everything left to you by your late parents. In legal parlance, it's called "renouncing" your inheritance.
Contact the attorney who is handling the estate, and let him or her know that you do not want any of their property. If no other heirs can be found, their home would likely be sold to pay off the bank and other creditors, and anything that's left would revert to the state where your mother lived.
Dear Mr. Myers: A long time ago, you mentioned a trade association that represents real estate investment trusts. Where can I find it?
Answer: Most real estate investment trusts, or REITs, are publicly traded companies that build, buy or finance apartments or other types of investment property. You can buy and sell shares of REIT stocks on the New York Stock Exchange and other major exchanges as easily as you can trade shares of Microsoft Corp. or IBM.
The trade group you're wondering about is the National Association of Real Estate Investment Trusts. Write to NAREIT, 1875 Eye St. NW, Suite 600, Washington, D.C. 20006. Its toll-free number is (800) 362-7348.
The group's outstanding Internet site, www.nareit.com, also features lots of free information about investing in the trusts.
Dear Mr. Myers: My sister and I purchased the house that we both live in. We each put up half of the down payment, each pay one-half of the mortgage and property taxes, and will split the profits 50-50 when we eventually sell. Would it be possible for me to get even more tax write-offs by taking depreciation deductions of the half of the house that I don't own?
Answer: Probably not. Based on what you've told me, the property isn't generating any rental income, so no depreciation write-offs can be taken. A married couple in a similar situation wouldn't be allowed to take depreciation deductions, so you and your sister probably can't either.
Still, you might be able to fatten your write-offs by tinkering with the way the title to the property is held and the mortgage is paid. For example, if you could buy out your sister's half-interest and then rent the space back to her, you might then be eligible to take depreciation deductions and qualify for many of the other tax breaks that landlords often get.
It's important to discuss your options with your sister and a good accountant. If getting lots of write-offs is more important to you than it is to your sister, you might even be able to structure a deal where you'd be able to take 100 percent of all the annual deductions for mortgage payments and property taxes in exchange for giving her a larger portion of the profits when the property eventually is sold.
Our booklet "Straight Talk About Living Trusts" explains all the benefits that creating a simple and inexpensive trust can provide to homeowners of every income level. For a copy, send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960. Send questions to that same address, and we'll try to respond in a future column.