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Love, marriage and the new tax law

Published Oct. 2, 2005

What is this, marriage counseling or real estate advice?

It was hard to tell sometimes last Saturday, when syndicated real estate columnists Bob Bruss and Dave Myers appeared at an "ask the experts" forum at Lakewood Ranch, a big planned development on the Manatee-Sarasota county line.

Their explanations of the new income tax law often had as much to do with marriage and divorce as they did with exemptions and loopholes.

Here's one benefit of the law that may mean we'll be hearing more wedding bells for people older than 55: The Tainted Spouse is dead.

You recall the Tainted Spouse. Under the previous tax law, homeowners older than 55 could take a one-time $125,000 tax exemption when they sold a home. Say a couple did so and then divorced, or one partner died, then the surviving partner married someone who had not used the $125,000 tax break.

Too bad, under the old law. The partner who had already used the tax break became a "tainted spouse," which barred the use of the tax break again after remarriage, even if the new partner had never used the exemption.

That provision is gone from the new tax law. "We'll see a lot more people eligible to get married," Bruss said.

Under the new tax law, couples of any age can avoid paying taxes on up to $500,000 of their profits from the sale of a principal residence every 24 months. (Single homeowners can shelter $250,000 of gain.) They can use that benefit over and over again, as long as they've lived in the house for 24 of the last 60 months, and those months need not be consecutive. That's a break for people who spend part of the year in Florida and part up north, Bruss and Myers said.

There's a benefit for divorcing couples, too, Bruss said. Often, the wife stays in the home with the kids and the husband moves out. Under the old law, when the house was sold, the wife got the tax break. The "out spouse" was disqualified if he or she did not live in the principal residence during the two years before its sale. The new rule says that if the "in spouse" qualifies for the $250,000 exemption, the "out spouse" who doesn't meet the two-out-of-five-year occupancy rule also qualifies for the $250,000 exemption on his or her profit share.

Bruss referred to the new tax law as "the Tax Complication Act of 1997," since there are still many areas of confusion and gray areas that the IRS has yet to clarify. "There will be a break-in period, let's face it," Bruss told an audience of about 80 interested and savvy real estate buyers and investors who gathered under an outdoor tent.

But Myers called the new law "one of the best tax bills to come out of Congress." The California columnist pointed out that "older people will be able to buy smaller and cheaper homes," because the rollover replacement rule that sheltered profits if sellers bought a replacement home of equal or greater value is off the books. That will benefit people like his parents, who are still hanging on to their six-bedroom home even though all the Myers kids are grown and gone. Now they can buy a smaller, less expensive home that better meets their needs without facing a big tax bite.

A questioner in the audience asked Bruss and Myers to read the tea leaves on last week's Wall Street nose dive.

Myers predicted the possibility of "a subtle impact on snowbirds," who might be hesitant now to sell up north and move south. "Florida might feel it more immediately and more powerfully than other places," he speculated.

But Bruss pointed out that mortgage rates are good (7{ or below) and may get better, which is always an incentive for sellers and buyers.

Call it a dish-watcher

Okay, try this: a dishwasher at eye level.

Many builders now lift the dishwasher a foot or so off the floor so it's easier to load and unload. The Sommersby model by Beazer Homes at Arbor Greene, in New Tampa, takes it further, raising the appliance so it's literally in your face.

"People like it or they don't," said Mylisa Jessen, the sales associate. "We tried the same thing in Charlotte and in Nashville and got a very good response; that's why we tried it here."

In this same model, look for the double sinks in both bathrooms on the second floor, a good way to head off early morning traffic jams if lots of people are trying to get out the door simultaneously for school or work. Note the mini-refrigerator in the master bath and the glass-fronted wood cabinet above it. We usually see such cabinets in the kitchen, but why not in a bath?

The mini-fridge "is kind of a neat thing, for morning juice, or wine," Jessen said. "We've had a good response."

Those are features that might make your life easier. In a model by a different builder, I saw the world's most useless wine rack _ well above head height, requiring a ladder for access, and in the warmest part of the room, near the ceiling. Ugh! That wine's going to taste like boiled grape juice, if you can ever get at it.

I have to compliment the security guard at the Arbor Greene entrance gate. I visited a few days before Halloween, and when I pulled up to the gate, ever the smart aleck, I said, "Trick or treat!" Fast on his feet, the guard stepped back inside the guardhouse and reappeared with a plastic pumpkin filled with candy. "Help yourself!" he said cheerfully.

Talk about curb appeal! He made me feel very welcome, which is an excellent first impression of a community.

Arbor Greene is on Bruce B. Downs Boulevard in New Tampa. Homes start in the $150s, and the builders include David Weekley Homes, Suarez Housing, Arthur Rutenberg Homes, Hannah-Bartoletta Homes, Mark Maconi Homes, Beazer Homes, Kennedy Homes and Windward Homes. Models are open 10 a.m. to 6 p.m. Monday through Saturday, noon to 6 p.m. Sundays. Web site:

Thanks for the memories

When I sit down to my Thanksgiving dinner this year, I'm going to remember the yard sale.

A few weeks ago I sold all sorts of great junk at a yard sale. As I combed through the house looking for likely sale items, I found things I'd forgotten I ever owned; items that hadn't been out of their packing cartons since we moved into our house a dozen years ago; things I hadn't used or looked at or cared much about for longer than that. Into the sale box they went!

That doesn't count some items that went to charities, or the box of mittens, caps and sweaters I sent to my sister-in-law, who lives on the Canadian border. (Really, which of us is more likely to need a knitted balaclava?)

As I spread out my offerings on yard-sale day and looked at the tables of other sellers up and down the streets of the neighborhoodwide sale, I was astounded by how much stuff we all have. Where does it come from? Why do we hang on to it?

Each year the average family throws away enough stuff to fill their house, report the organizers of the third annual Use Less Stuff Day, scheduled this year on Nov. 20.

They offer these additional statistics, which are enough to make us all run home and clean out a closet:

Americans use 374-million pounds of paper a day, and 1.5 percent of our municipal waste is third-class mail, four times as much as all our discarded aluminum cans.

In 1981, the average household received 59 mail-order catalogs. By 1991 that number had grown to 142, an increase of 140 percent.

During the holidays, Americans generate 25 percent more trash, or an extra million tons per week.

Speaking of Thanksgiving dinner, if each person wastes just one tablespoon of cranberry sauce, it adds up to 16.1-million pounds.

I'm told that 200 households participated in the yard sale where I sold my castoffs, which suggests that I have plenty of company in my too-much-of-a-muchness. I know lots of us were exchanging comments like, "I don't know why I keep all this stuff" and "I could have brought twice as much" and "I can't believe how much stuff I have that I never use."

What a blessing, and what a curse! Here we sit, battling the rising tide of stuff and complaining how overburdened we are, while we all know others who barely have enough. It's a humbling thought. This must be what is meant by an embarrassment of riches.

As I sit down to my turkey and dressing this year, I'll recall the yard sale. It's a wonderful life, and there's more to it than acquiring a lot of stuff we don't need and then wondering how to get rid of it!