Question: I sold a rental property to my son this year, but my husband and I are listed on the deed with 66 percent ownership and my son 33 percent. The loan was taken out in my son's name to buy the property. Because my husband and I still have ownership in this property, despite the real estate sales to my son, are we still liable for capital gains tax?

Answer: A transfer of title is typically a taxable event where there may be income taxes on sale profits as well as state and local transfer taxes. However in this case the standards are different.

We usually think of a real estate sale as an arms-length transaction, but this is not a sale among strangers with adversarial interests. Instead, this is the sale of a partial real estate interest within a family. If the transaction is audited you can expect that the first question to be raised is whether the sale price reflects a fair-market value for the property. For this reason you should have the property appraised so you have evidence of a fair market value. Be sure to speak with a CPA or other tax professional for specifics. Also, see IRS Publication 527, Residential Rental Property.

Question: How do you avoid capital gains when flipping houses? Or, if not possible to avoid, how are investors able to flip one house and then go to another. Are there loopholes for this particular kind of real estate investing?

Answer: Flipping real estate means buying at one price and quickly selling at another, hopefully at a higher price. When an investor sells a property in less than a year any profit is subject to a tax. Investors who buy and sell a succession of homes have sufficient capital and credit to handle more than one property at a time. Each property represents a discrete transaction with its individual costs and taxes.

As to loopholes, one could possibly deal one property for another as a 1031 exchange. However, a 1031 exchange defers a tax liability, it does not end it. For specifics, speak with a tax professional.

Question: In 2006 my husband and I purchased a New Jersey beach house for the "bargain" price of $1 million. It's located across the street from the beach and central to all amenities. What do you think we can sell the property for in today's market?

Answer: I have no idea -- but I know who does. You need to speak with local real estate brokers who are active in the market where the property is located.

Unless you operate a hedge fund, it's likely that $1 million is a lot of money. With 100-percent financing and 6 percent interest the cost of such a property with a 30-year mortgage is $5,996 a month for principal and interest. Insurance and taxes are extra.

If the property was bought for cash then you have to look at the interest such money might have generated if invested elsewhere. Interest income not earned is an "opportunity" cost, cash you won't get and a trade for however else you are using the money.

Given the size of your investment it makes sense to subscribe to the local newspaper so you can follow development trends that may impact the value of your property. It also makes sense to stay in touch with local brokers, individuals who can interpret local market trends, locate renters, manage the property and assist in the sale when the time is right.

Question: I'm interested in researching and learning more about the Texas rent-to-own laws. Can you please recommend articles, white papers, or resources I could contact for that information?

Answer: If by "rent-to-own" you essentially mean lease-purchase arrangements, then you need to speak with experienced real estate brokers and attorneys for specifics before entering into any agreement.

Why? Because a large percentage of such arrangements result in premium rents and no sale, they are often difficult to finance and without a clear and comprehensive written agreement there may be huge debates regarding the obligations of buyers and sellers.

The Real Estate Center at Texas A&M University is a terrific research source for the state.

Question: My family is thinking about buying a home since prices have dropped recently. Should we make that decision now? Or, should I wait because the price will continue to drop within this year? My family was thinking about buying a manufactured home instead of a house. However, when we look at the market right now, the house's price is not that expensive comparing to the manufactured home.

That is why we decided to look for the houses now.

Answer: We know the price of homes today and we know what they sold for in the past. However, we have no idea how homes will be valued in the future thus we can't say that prices will drop in the coming year.

Rather than try to construct what may happen in the future, why not approach the issue a little differently: What do you need in terms of a home? What is reasonably and rationally affordable? How much would your lifestyle improve if you bought now?

Why not speak with a few lenders to see how much you could borrow with fixed-rate financing. After that, get in touch with local brokers for information regarding available properties in your community.

Question: My mother recently passed away at 94. She made a new will just months prior to her passing changing the executor to my middle brother. He also is receiving her wedding ring, not me, her only daughter, who for the last 50 years was the recipient of the ring. I have no access to the house because a new door and lock has been put on, even though we are to share the inheritance three ways.

Shouldn't I also have access to the house if my two other brothers do? What should I do?

Answer: You should immediately contact a probate attorney in the community where the will was filed.

Wills often raise difficult and uncomfortable family issues. That said, competent individuals have the right to name executors, revise wills and change or eliminate beneficiaries as they elect. Nothing in an estate belongs to anyone unless and until the individual writing the will says otherwise.

Wills sometimes reflect astonishingly hurtful, controlling, malicious and moronic behavior. However, unless the will is somehow invalid or the deceased individual was incompetent -- say someone with a history of profound mental disorders -- the odds are good that a court will accept the will as written.

You likely cannot change what has been done, but you can do better by writing a will that will treat your heirs in the way you would like to have been treated.

Question: I'm trying to find more information about online lead generation classes/seminars. Do you know of any or where I should start my search? Any help would be appreciated.

Answer: Realty Times has had a number of articles regarding lead generation. For a range of titles, press here.

Since nearby competitors are unlikely to share their secrets, an alternative is look at a site which follows search engine trends such as Search Engine Watch.

Lastly, go the masters of pay-per-click, Google. They have in-depth descriptions of their Ad Sense program. These explanations can tell you a lot about the general workings of search engines.

Question: I recently bought a new property that has a maintenance easement. The builder promised the property owner next door to build a fence that will cover my property. Can they do this?

Answer: The general idea of a "maintenance easement" is to give access for repairs near a property boundary. It may be that all the builder is saying is that he has agreed to erect a fence on the neighbor's land (or the border between your property and the neighbor's) and to build this fence some of the workers will be on your property during the construction process.

A maintenance easement is not unreasonable in the usual case, you're not being asked to pay for any of the construction costs and -- if the fence is nice -- it may be that the value of your property will increase and you'll have additional privacy. All in all, a potentially good deal for you. For specifics, speak with the builder and check your documents.

Question: Websites such as eBay.com do not charge commissions to the seller. How do they manage to do this? Why would they want to do this?

Answer: eBay plainly charges fees. It has a published schedule which includes a $150 "insertion" fee for a 30-day ad or auction listing and $300 for a 90-day listing. In addition, eBay sells signs.

The eBay system is open to everyone. For instance, some portion of eBay's transactions involve real estate brokers who use the service as a marketing tool. One of the first items that came up when I looked at the system was a 10-unit apartment property in Chicago which also included a store, parking and warehouse space. The seller was a real estate licensee.

Have a real estate question? Send your inquiry to Ask Realty Times. Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here. For past columns, please press Ask Realty Times.

This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.

Published: May 11, 2007

Use of this article without permission is a violation of federal copyright laws.

Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.