Don’t fret about lost policies

Question: We own several rental properties and our home. But we cannot locate the title insurance policies for these properties. How can we obtain a copy of our title insurance policies?

Answer: Unless you expect a title claim, don’t waste your time trying to obtain copies of your owner’s title policies. Chances of ever having a title claim are one in a zillion.

If you do have a title claim, and the insurer refuses to pay, the insurer must then provide a copy of the policy and explain why your claim is excluded from coverage. But in the future, it’s best for any homeowner to keep all their insurance policies in one location. Even old, expired policies should be kept forever, just in case a delayed claim arises.

No deductions for paying Mom’s loan

Question: In 2004, I had to step in and make the mortgage and property tax payments for my mom on her house. She recently received her IRS Form 1098 statement from the mortgage company. But only her name is on the mortgage. I have my canceled checks for the payments. However, the deductions won’t do her any good, as she has no taxable income. Can I claim these deductions because I made the payments?

Answer: No. The reason is you have no legal reason to pay your mother’s mortgage and property tax payments. In other words, you won’t suffer any loss if the payments are not made.

But this problem can be easily solved if your mother will add you to her title, perhaps as a joint tenant with right of survivorship. Then you can deduct future mortgage interest and property tax payments though your name is not on the mortgage. For details, consult your tax advisor.

Charging flat fees is a growing trend

Question: I am selling my rental property. The title insurance company wants a $900 flat fee. The sales price is $775,000. Also, they charge a $160 “property ID” fee. Is this reasonable?

Answer: Those are very reasonable fees. Flat fees for title insurance and property transfers are a spreading trend in real estate sales, rather than basing title transfer fees as a percentage of the sales price. As a general rule, title transfer costs below 1% of the sales price are reasonable.

Seller sees flip side of carry-back loan

Question: I carried back a five-year, installment-sale home mortgage. But in a few months, that note comes due, and I will owe my delayed capital gains tax. I think you should emphasize that an installment sale delays the tax, but not forever.

Answer: You are correct. But don’t forget the benefits you enjoyed: a quick, easy sale for top dollar, excellent interest income on the installment-sale balance and delayed installment sale while the federal capital gains tax rate came down to 15%.

If your buyer is making payments to you on time without problems, you can offer to extend that installment-sale note for another few years to keep earning interest and continue delaying the tax payment. I presume you already claimed your $250,000 principal-residence sale-tax exemption. For more details, consult your tax advisor.

Send letters and comments to Robert J. Bruss, 251 Park Road, Burlingame, CA 94010.