An option to buy can help couple secure retirement home

Q. We are planning on retiring in three to five years to a waterfront location. Elderly friends who are sisters offered to sell us their house and they will be our tenants until we move. Then they will move into assisted living or senior apartment complex.

We own our home and have excellent credit, but worry about my husband losing his job in this economic crisis. They are willing to wait until we're ready to purchase, but I'm concerned that if something happens to them, their nieces and nephews could sell the house to the highest bidders. I'd like to at least get our names on the deed and wondered if this could be done by paying them half of the purchase price, with an agreement to pay the balance when we move down there. Do you have other recommendations?

A. The first thing to remember is that a lot can change in three to five years. You may decide to postpone retirement, or even prefer senior housing yourselves. Your friends might want to move before you are ready.

But if you are really set on this house and no other, take the proposal to your own accountant and go over the figures. Get a home inspector's report, so you'll have an idea about the condition of the roof, electric system and plumbing, and how much you might expect to pay for repairs in the next few years. What would the house cost you in property taxes, landlord insurance and mortgage payments? How much rent could you receive from your new tenants? If the numbers work out, perhaps the house would carry itself.

Even so, if the sisters' plans should change and they moved out, you'd end up renting to strangers. You'd be absentee landlords, which is always an invitation for trouble.

Instead of buying now, consider offering a modest sum in return for an option to buy the property at a given price within three to five years. That would nail down your right to purchase if and when you wanted, no matter who owned the property.

You'd want your own lawyer's input on the contract, of course, and so would the sisters.

Q. I am a college sophomore majoring in business administration in hopes to one day own a real estate business and to become a real estate expert. What I should do/where should I start on my journey to become a real estate expert?

A. You can get a basic introduction to the field of real estate by taking the course of study the state requires for someone who wants to get a salesperson's license. Even though you may not want a license at this point, you'll come out with a good overview of the industry. For information on where courses are offered, contact your local association of Realtors.

Q. My parents own a vacation home. Recently they put it on the market. They received an offer for a three-year lease to own. All four children have advised them not to do this. Can they legally back out of the deal?

A. It's not clear what you're talking about - rent-to-own? Lease-option? Land contract?

In any event, if your parents simply "received an offer" and haven't accepted it in writing, they're not bound. If, on the other hand, they've already signed a contract of some sort, their lawyer can look it over and tell them whether they have an out or not.

Q. My parents recently passed away and the house was left to me. I want to sell the house. Who pays for the taxes when it is sold?

A. You probably won't owe any capital gains or income tax on the sale. When you inherit real estate you get a new cost basis, value at the time of death or soon thereafter, so you aren't likely to have any taxable profit.

Q. My father suddenly died Dec. 30, 2006, and my mother sold their home in December. Can she claim Dad's $250,000 capital gains exemption as well as her own? She has purchased a new home elsewhere. Would that purchase offset her capital gain?

A. Because she sold within two years of your father's death, your mother can use the full, married couple's tax exclusion on her gain. It no longer makes any difference whether a replacement residence is bought or not.

You don't say where your mother lives. Given the current state of the market in most parts of the country, it's nice to know there's some place where one can sell a home and worry about half a million dollars in profit.

• Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

2009, Creators Syndicate Inc.