Century 21 Island Life
Robert U. Valenzuela, P.A.

Vacation Home Not Exempt
From Real Estate Taxes

Length of rental period a key determinant
By Robert J. Bruss

DEAR BOB: I own a beach condo, which I rented out last summer through a rental agency. This summer I want to use it as my second home, but periodically allow family and close friends to use it at a reduced rental rate to help with expenses. Am I required to pay tax on that rental income? --Alice H.

DEAR ALICE: If you rented your beach condo for more than 14 days in 2005, you are required to report that rental income and deduct applicable expenses on Schedule E of your 2005 income tax returns. However, if the rental days were less than 14, you can keep the rent money and Uncle Sam doesn't care.

The same rule applies in the summer of 2006 when you plan to spend more personal time enjoying your beach condo. If you rent it for more than 14 days, the rental income must be reported on Schedule E of your tax returns where you can also deduct applicable expenses, such as part of your mortgage interest, property tax, insurance, utilities, repairs, and other operating expenses.

However, if your personal use days exceed 14, or 10 percent of the rental days, then any tax loss in this tax category cannot be used to offset your other ordinary taxable income. For full details, please consult your tax adviser.


DEAR BOB: We want to buy our son a house for all cash. We suggested buying it in our names to avoid paying a gift tax so our son will receive a stepped-up basis when he inherits it (we are 78 and 80). But our daughter-in-law suggests putting the house in their names now so they can use the equity. She says we would still not have to pay a gift tax. What is the best way to handle this? --Barbara G.

DEAR BARBARA: From your description, it sounds like your daughter-in-law wants to grab on to your very generous gift and let you worry about paying the gift tax, if there is any.

However, if you have given away less than $1 million each, there won't be any gift tax to pay, although you will have to fill out a gift tax return if you title the house in your son's name.

How is their marriage? Maybe the daughter-in-law is thinking of a divorce? Just asking.

Frankly, I prefer your idea of buying a house and letting your son and daughter-in-law live in it for a few years. You can specify in your will it goes to them after you both die. Meanwhile, you keep control just in case there is a divorce lurking.


DEAR BOB: If a home seller has filed Chapter 13 bankruptcy reorganization, can the seller sell the house without court approval? --Jaime T.

DEAR JAIME: I am not a bankruptcy attorney. But my one very limited experience in this area required approval of the U.S. Bankruptcy Court judge for the sale of the debtor's home.

I am not aware of any title insurance company that will insure such a title transfer without the Bankruptcy Court judge's approval.

Everything worked out very well in my one experience because the home sale provided enough cash for the debtors to pay all their debts in full and they even had several thousand dollars left for a down payment to buy another house.

Copyright Inman News. Used with permission.

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~ Henry & Lori Coombs

It was a pleasure to work with Robert. He's extremely knowledgeable about the market and real estate in general. He was very easy to work with and answered all of our questions throughout the process.


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Robert is excellent.


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Great job!! Very professional. Robert is great and excellent managing end to end transactions. Always here to help and assist. Once again, awesome job!!


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I can never thank you enough for helping me find and negotiate my dream home and for all the advice that goes way over and beyond your responsibilities. You are a professional in every sense of the word. Thank you.


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Robert is an honorable man, a pleasure to do business with. I could not be more pleased.


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We have already recommended him. He has history and knowledge of Key Largo that is priceless. Robert provided excellent hands on assistance with everything. Now I'm happy to call him my neighbor.


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Great real estate agent.


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It was my first time buying a home. Robert was patient and made it easy. He treated me like family. I recommend him to people all the time!


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Robert was very friendly. We like working with him very much and would use him again. Thanks for all of your help!


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Outstanding service and professionalism received from Robert. He went out of his way to help us. Property sold within one week. He's the best!


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He was wonderful, courteous, and did all he could to sell my home. I have already recommended Robert to my friends and will continue to tell anyone else who is looking for a new home.


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The realtor is a true professional. Everything was great! He was excellent. I will refer him every chance I get. Very service-oriented.


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Robert Valenzuela was very honest, professional, and very courteous with us. On behalf of the Salgado family, we want to thank Mr. Valenzuela for all his patience and kindness. In our opinion, Robert was outstanding with his performance and we will definitely recommend him to our friends and family.


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For the last few years we have been buying, selling and building properties here in the Florida Keys. Robert has been part of our success since we started doing business with him. He is very dedicated, knowledgeable, professional, and most of all personable. We have and will continue to recommend Robert to all our friends, family and business partners.


~ Rene & Fradys Castillo

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