Question: I was wondering about people who sell their homes at a loss. Can you write off the loss as a deduction against income? Are there any other options that make the loss less painful?

Answer: One of the great oddities of the tax system is that profits from the sale of a prime residence are potentially taxable, but losses are not deductible.

Representatives Robert E. Andrews (D-NJ) and Ron Lewis (R-KY) have introduced HR 1876, legislation that would change the tax code so that losses from the sale of a prime residence would be deductible. However, until such legislation passes home sale losses cannot be written off.

Is there a way around the problem? Ask your tax professional about this idea: Instead of selling, move and rent the property. Losses on the sale of investment real estate are deductible.

Question: If it is possible, please advise with a short phrase, words, or numbers: What is the maximum tax deduction for the sale of a condo owned free and clear?

Answer: I don't know. The sale tax on your unit may well be different than the sale tax on a neighboring unit.

Here's what I do know: In general terms sale profits equal the sale price less the acquisition cost, capital improvements and closing costs to buy and sell the property. If the property has been used as a prime residence for two of the past five years you can likely shelter from federal taxes $500,000 in sale profits if married and $250,000 if single.

That the property is a condo used as a prime residence as opposed to another form of housing such as a single-family home does not matter. That the property is or is not free and clear of all debt is a matter to work out between you and your lender, if any.

One thing is certain, tax laws are complex and the probability of a short, spiffy and complete answer that will address all possible situations is unlikely. Instead, please see IRS Publication 523 , Selling Your Home and speak with a tax professional for details.

Question: I purchased a new house in Utah. At first we wanted to rent the property, but now with changed market conditions should we sell it and keep the cash? I may break even and not gain or lose if I decide to sell now.

Answer: Real estate is a local commodity. You want to speak with folks who know anything about your particular property and your neighborhood and community. Those people are the local brokers who are active in your area.

That said, let's look at some ideas.

First, real estate is a long-term investment. The probability of short-term profits -- despite what you may hear on late-night television -- is remote.

Second, it may be that you will have to rent the property at a break-even level or even at a loss for several years. This can be financially painful but there are certainly cases where investors have had losses at first and then gained income and equity over time. If you have to rent at a cash loss for several years can you afford such an expense? If not, you have little alternative but to sell now.

Third, can you really break even if you sell? Consider the sale price paid plus closing costs and then consider that it will also cost money to market and close when you sell. If you're a short-term owner the odds are against you in most markets.

Question: My husband and I are considering purchasing an investment property that would be located somewhere in the southeastern part of the country. We want to purchase something that will have the possibility for rental and be located in a desirable area. My question is: Where is the latest up and coming area that is still reasonable but will have the potential for future payoff?

Answer: We certainly know where such areas have been, but when we look toward the future then crystal balls become cloudy.

I think you need to approach this question differently, I think you need to narrow your search by asking:

Which areas in the southeast are likely to have the best job growth in the coming decade? Why? Contact state and local economic development offices for their projections.

Which areas in the southeast are likely to have the largest relative gain in population -- that is, not how many people are moving to an area in absolute numbers but the percentage population increase.

Which areas have the most restrictive growth policies, thus suggesting a premium for existing homes?

Once you pick a general area, the next step is to find a local neighborhood or community in the path of future growth. One way to do this is to vacation in the area that holds your interest to learn more about local areas and trends. Also, subscribe to the local newspaper or follow it online so you can track local real estate trends.

Question: Why do real estate brokers come up with an asking price on a house and then within a month start saying the price needs to be lowered about 10 percent?

Answer: Because they are trying to get the best possible price for your property.

Imagine if a broker suggested a lower price and the property sold in 20 minutes. Wouldn't you have a nagging feeling that you should have asked for more? Alternatively, it makes sense to test the market -- in some cases homes sell for the initial asking price, depending on the property and local market conditions.

Question: When a comparison is run on homes to get a price, should a new roof, new siding door, new flooring, fresh paint, new patios, 6" walls instead of 4"walls, new doors and windows be taken into consideration? Maybe I'm wrong, but I feel a home with all of this should be priced higher than one that doesn't have such features.

Our broker says that none of this will be considered on a comparison or an appraisal. She says the fact that we have new 3/4" oak cabinets doesn't mean the value of our home is increased when compared with anther home that has 1/8" cabinets.

Answer: If homes were priced on a replacement basis, element by element, then each individual item would be valued and considered when a final offering price was made. In practice this does not happen. Instead, homes are sold as a package with lots of elements and no two packages are exactly alike. Thus your property may have better cabinets but another home may have nicer appliances or a bigger yard.

Question: Everybody that looks at our home says it's perfect and they can't give us any ideas or suggestions to make it any better. Why can't we get a top price?

Answer: Let's think this through. To whom are people speaking? An owner. Why would they be anything but polite regarding the property? They have no interest in a debate and would gain no benefit explaining that the place is anything less than perfect.

But perhaps it's true that the house is "perfect," whatever it is that perfect may mean. Then the issue may be that the price is right, but not for the buyers met to date. It may take some time to pair the right property with the right buyer, especially in markets when home sales have slowed.

Question: We have told our broker about things she says our house has that in reality -- it doesn't have and she hasn't changed these errors. We've lost a sale because of this broker misrepresented on our home, as the seller backed out at the last minute. We had first spent money making changes so the buyer would be happy -- and after that was when the broker misrepresented the property. This cost us money that we wouldn't have spent and now we are being told that it's money down the drain. We changed brokers and haven't had any luck. We're wondering if the broker who misrepresented it could be causing us problems.

Answer: Brokers have a plain obligation to be factual and accurate when representing a property. If you think this was not the case with the first broker, contact your state real estate regulator. A list of regulators can be found at ARELLO.com . Many states have a "guarantee" fund to protect consumers who have suffered financial losses because of proven broker misconduct.

It seems unlikely that an unhappy broker would be able to prevent the sale of a property listed by another broker. The reason is that the marketplace has large numbers of independent buyers and sellers to whom the first broker does not have access. Moreover, the new broker certainly wants to sell the property.

Question: Every broker who looks at our property says our price is good but then they come back and offer 10 to 15 percent below asking price. They ask us to pay all closing costs, all points, leave all appliances (which we are willing to do for the right price), make two monthly payments for the buyers and give a warrantee (we have been offering this from the beginning). Is this fair?

Answer: "Fair" has nothing to do with it. As a seller you want the best possible price and terms and buyers want no less. Each side will try to get the deal which is best for them.

A "good" price may not be sufficient to induce a buyer to make an offer. Moreover, what would you say if a broker said your property was grossly over-priced? That would probably not be a good conversation.

You surely have the right to make a counter-offer, but before doing so take a look at your market. Are homes quickly selling? Or do they linger on the market?

Selling a home is difficult in the sense that more than money is involved. There are also questions of status and ego. You need to ask: How realistic is your price? Is it realistic enough to get the job done, to sell the home? Negotiating both price and terms is a routine and normal way to buy and sell property, except in exceptional seller markets -- and exceptional buyer markets.

For instance, when my local market was hot buyers were making better than full price offers with no contingencies. Today such offers are gone. Instead, sellers are happy for a reasonable offer and will likely throw in whatever goodies are needed to make the deal work.

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