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Q&A: Wife should get her name on deed

June 25, 2018 By Liz Weston

Dear Liz: My daughter, who is a stay-at-home mother of two, recently bought a home with her husband. They have been married seven years. I recently discovered that her name isn’t on the deed to the home. I don’t know why, but it doesn’t sound good to me. What are her potential issues?

Answer: The issues depend on where she lives. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

If your daughter lives in one of those, assets acquired during marriage, including a home, are generally considered community property owned equally by both spouses. Her husband, ideally, should place her on title via a deed to reflect true ownership or place it in a trust to provide for his wife. However, if her husband should die without bequeathing her the property, the home could go to probate proceeding, and the wife would have to provide proof that it was community property to receive all of it, says estate planning attorney Jennifer Sawday of Long Beach.

In other states, different rules apply. Typically assets held in one person’s name are that person’s property. If the husband has a will, he could leave the house to your daughter — or not. Should he die without a will, she could wind up sharing ownership of the house with others, such as children from a previous marriage.

Filed Under: Estate planning, Q&A, Real Estate Tagged With: couples and money, deeds, q&a, real estate

Tuesday’s need-to-know money news

June 12, 2018 By Liz Weston

Today’s top story: How 1% savings hikes can spice up retired life by $1 million. Also in the news: 7 ways to save at Disneyland, why you shouldn’t let a down payment scare you from buying a home, and how Millennial men and women invest differently.

1% Savings Hikes Can Spice Up Retired Life by $1 Million
The earlier start, the better the boost.

7 Ways to Save at Disneyland — No Magic Required
Keeping your money away from the Mouse.

Don’t Let a Down Payment Scare You Off
Help is available for first-time buyers.

401(k) investing: How Millennial men and women invest differently
It goes back to childhood.

Filed Under: Liz's Blog Tagged With: Disneyland, down payments, Investing, millennials, real estate, retirement savings, tips

Friday’s need-to-know money news

May 11, 2018 By Liz Weston

Today’s top story: Amazon Prime hits $119. You’ll probably pay it. Also in the news: Understanding a bear market, 5 money mistakes 20-somethings make, and the 3 best reasons to rent your home instead of buying.

Amazon Prime Hits $119. You’ll Probably Pay It.
It’s about more than just free shipping.

What Is a Bear Market?
Investment prices are dropping.

Ask Brianna: 5 Money Mistakes 20-Somethings Make
How to side step them.

The 3 best reasons to rent your home instead of buying
Not every reason is financial.

Filed Under: Liz's Blog Tagged With: 20-somethings, Amazon Prime, bear market, Investments, money mistakes, real estate, rent vs. buy, stock market

Q&A: Selling a home you’ve shared with tenants

May 7, 2018 By Liz Weston

Dear Liz: I am 53 and own a home in which I live and rent out rooms. Every year I pay my taxes on the rental income and get to deduct depreciation.

How does this affect the taxes I will pay on the home when I sell it? Will I be able to claim the $250,000 exemption? I may live in this home until my death and leave it to my children. How would the rental depreciation affect their stepped-up basis and any taxes they might have to pay?

Answer: Renting rooms is similar to taking the home office deduction in the Internal Revenue Service’s eyes. In both cases, you have to recapture any depreciation, but the business use doesn’t affect your ability to take the home sale exclusion.

The home sale exclusion allows you to exempt from capital gains taxes up to $250,000 of home sale profit. (The exclusion is per owner, so a married couple potentially could exempt up to $500,000.) You’re eligible for the exclusion if you have owned and used your home as your primary residence for at least two years out of the five years before the sale. You will have to pay income taxes on the amount of depreciation you deducted over the years. That depreciation amount is added back as income on your tax return.

If the space you rented out had not been within your living area — if it were a separate apartment or retail space — then different rules would apply.

If you decide to bequeath the home at your death rather than selling it, your heirs won’t have to pay the depreciation recapture tax — or capital gains taxes on any appreciation that took place while you owned it. Instead, the home’s tax basis will be “stepped up” to its current market value.

If they sell it soon after inheriting it, they won’t owe much if any tax on the sale. If they hang on to it before selling, they’ll owe taxes only on the appreciation that took place while they owned it. If they move in and make it their primary residence, they too could qualify for the $250,000-per-person home sale exclusion once they have owned the home, and used it as their primary residence, for at least two of the five years before they sell it.

Filed Under: Q&A, Real Estate, Taxes Tagged With: q&a, real estate, Taxes

Friday’s need-to-know money news

April 27, 2018 By Liz Weston

Today’s top story: If you sold fearing a market crash, here’s what to do now. Also in the news: Why you should look under the hood of your target-date fund, a home buyer’s guide to motivated sellers, and is Amazon Prime worth its new price?

If You Sold Fearing a Market Crash, Here’s What to Do Now
Getting back in the game.

It’s Time to Look Under the Hood of Your Target-Date Fund
Taking a closer look.

A Home Buyer’s Guide to Motivated Sellers
Making the right match.

Is Amazon Prime worth its new $119 price tag?
The online giant is raising Prime prices.

Filed Under: Liz's Blog Tagged With: Amazon Prime, Investments, market crash, real estate, Savings, stock market, target-date fund

Tuesday’s need-to-know money news

April 24, 2018 By Liz Weston

Today’s top story: Lay groundwork for better home value with artful landscaping. Also in the news: How to manage the cost to finish a basement, more Wells Fargo refunds are coming, and how long you should keep your tax returns.

Lay Groundwork for Better Home Value With Artful Landscaping
Increasing your curb appeal.

How to Manage the Cost to Finish a Basement
Create a man cave or a family room.

More Wells Fargo Refunds Coming After $1 Billion Fine
Planning to pay back customers.

How Long Should Tax Returns Be Saved
Start with a minimum of 3 years.

Filed Under: Liz's Blog Tagged With: finishing a basement, home improvements, landscaping, real estate, refu, Wells Fargo

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