New tax deductions created for owners with faulty drywall

The Internal Revenue Service has made some changes that will benefit the hundreds of thousands of owners who bought new homes in the past few years that are filled with spoiling drywall.

Q. I bought a newly constructed home about two years ago, but the drywall that separates our rooms recently started to crumble and smells really bad. A few months ago, you wrote about “bad drywall” that some builders had imported from China and said that some states have filed lawsuits against the homebuilders who imported it. What is the status of those lawsuits?

A. Government prosecutors in a handful of states, including big housing markets in Florida and California, have recently reached agreements with several builders that require the developers to replace the rotting walls that they made from faulty drywall, sometimes plaster wallboard or plasterboard, that was imported from China.

Most of these pacts call for the builders to pay for the needed repairs, but do not require them to pay their buyers for punitive damages. However, several private lawsuits also have been filed in which homeowners are asking their developers to pay for the work, give them cash or even to buy their homes back.

Your letter doesn't give me many details about your particular problems, so you should contact your state's real-estate regulators or consumer-affairs department for more information.

Importantly, though, the IRS recently ruled that most homeowners who have faulty drywall in their home can now take an immediate tax deduction on their next tax return for needed repairs that they pay for themselves.

That's a huge improvement over previous IRS rules, which said such repairs could be written off only to reduce taxes on any profit the owner might have to pay when the home is eventually sold several years from now.

Claiming the newly created deduction is complicated, so you will need a tax expert's advice. You also should immediately contact a doctor, then a lawyer, if the rotting drywall is making you or other members of your family sick.

Q. In studying my ancestry, I found that one of my late relatives had a “zygocephalum” of land. There is no definition of this term in the dictionary that sits on my bookshelf to explain it. Can you?

A. Sure. A handful of dictionary publishers have dropped the term from their pages because it really isn't relevant in modern society.

A zygocephalum is the area of land that a team of oxen could plow in one day. It was widely used to establish farm ownership in Europe for several centuries and was even briefly used by our own Founding Fathers. But since some oxen could plow faster than others and some farmers worked harder than others the system gave way to today's uniform standard of measuring land in 43,560-square-foot acres.

Q. I heard a brief report on the radio that some rich guy has bought a ranch in New Mexico for about $80 million. Is this the biggest sale in history?

A. It depends on how you define “big.”

Cable TV and sports mogul John Malone recently purchased the 290,100-acre Bell Ranch in northeastern New Mexico for what the sales agent says was close to its asking price of $83 million. But the deal is considered more of a “land sale” than a “home sale,” because few homeowners have a 290,100-acre yard.

In terms of sheer geographic size, though, Malone's deal represents the largest purchase of privately owned land in nearly a century. The 453-square-mile parcel can support 5,000 head of cattle, is loaded with wildlife prized by trophy hunters and features 18 miles of frontage along the historic Conchas Lake. It also has its own private airstrip.

You can view the property at www.thebellranch.com.

In another major sale that closed this month, a private investor paid $50 million for a 48,000-square-foot home in the swanky Bel-Air area of Los Angeles. But If that seems like a lot, consider this: The 11-bedroom home, including its “swan pond” and 250-person ballroom, was first listed for $85 million about a year ago.

Apparently, even multimillionaire sellers are suffering from the long housing downturn that has affected the rest of us, too.

- For the booklet “Straight Talk About Living Trusts,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.

© 2010, Cowles Syndicate Inc.