Q: What is a “package mortgage”?

It’s a loan that covers both real estate and personal property.

Package mortgages have never been very popular, in part because borrowers who default on their payments stand to lose not just their home but all of their furnishings (or any other personal effects) that they have pledged as collateral. But interest in these offbeat loans has picked up a little in the past year, experts say, as uncertainty about the future of home prices has prompted some lenders to ask riskier applicants to pledge additional assets in order to get a mortgage to buy a house.

Q.: My wife and I purchased a home together as joint tenants in 1977, and its value has gone up by about $450,000 since then. She passed away on Christmas Day two years ago, and now I would like to sell in January and move into a smaller place. Will I be able to keep all $450,000 of the profit tax-free because my wife and I purchased the home together and filed our taxes jointly until she died, or will I only get to keep $250,000 tax-free because I am a widower now and file my taxes as a single person?

A.: The IRS allows single tax-filers like you to keep up to $250,000 in profits tax-free when a home is sold, provided that the property has been their primary residence for at least two of the past five years. Married couples who file jointly can keep up to $500,000 from taxation.

The bad news is that IRS rules don’t offer much flexibility to the actual $250,000/$500,000 profit cap, even to people who have recently lost their spouse. You’re a single tax-filer now, so you qualify for the lower limit only, despite the fact that you owned your home with your wife and filed taxes together for decades before she passed away.

The good news, though, is that another provision of the tax law suggests that you probably won’t have that much taxable profit – and perhaps won’t owe Uncle Sam anything – even though you expect to net about $450,000 from the sale but only qualify for the $250,000 exemption. That’s because when one spouse dies and their half-interest in the home is passed to their survivor, the value of the property is “stepped up” to market levels at the time of the deceased’s death for IRS purposes.

You’ll probably owe taxes on only the amount of appreciation that has occurred between the time your late wife died two years ago and the date that you actually sell the home in the next several weeks. It’s doubtful that the property has appreciated by more than $250,000 in the past 24 months, especially considering that price gains in most parts of the country have stalled during recent years.

Also remember that sales commissions and related expenses, as well as the cost of most home-remodeling projects that have been completed through the years, also can be used to knock your net sales profit that would be subject to IRS taxes even lower. Once all these tax breaks are taken into consideration, you probably won’t owe a single penny in federal taxes on your $450,000 profit, even though you qualify only for the $250,000 exemption that’s granted to single filers.

For more information, get a copy of IRS Publication 523, “Selling Your Home,” at www.irs.gov or by calling the agency toll-free at (800) 829-3676.