Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, November 27, 1995 TAG: 9511280031
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Medium
A: You can recover from a bankruptcy, but you have to work at it.
Michael Hincker, manager of the Roanoke office of National City Mortgage Co., said the vast majority of lenders and programs require three things:
At least 24 months must have elapsed between the time the bankruptcy is discharged and the time credit for a new mortgage is approved. He knows of no company that allows less time.
You must have re-established credit with other lenders.
You must have paid your new bills after discharge and properly handled your new credit.
Mortgage lenders also will look at your reasons for filing for bankruptcy, Hincker said. If one lender won't approve your application for a new mortgage, perhaps another one will.
You said you filed a year ago, but you do not give the date of discharge. But in the two-year period after discharge you must work at building a good credit record.
It is easier to open a charge account with a store than it is obtain a bank credit card. That's because the store has tight control over use of the card and also because the store wants to make it easy and convenient for you to buy its merchandise. Don't buy anything you don't need, but if you are going to buy an item anyway, try to buy it through a store charge account or store installment plan.
You might also apply for a secured credit card. Some banks will issue cards tied to a savings account. You will have revolving credit up to the amount you have on deposit in the bank.
It goes without saying that you must pay your rent, utility bills and other obligations absolutely on time.
Interest on equity line
Q: I read on the Money Page that you could take a tax deduction for the interest paid on a home equity line even if you used the money for some other purpose such as buying a new car. I have been under the impression for a long time that you could take a tax deduction for the interest only if you spend the money on the house. Which is right?
A: The article you read is correct.
Stan Boatright, a certified public accountant with the Roanoke firm of Lucas and Boatright, said you can deduct the interest as long as the loan is secured by a deed of trust, such as a first or second mortgage, on a home. And a home equity line is a second mortgage.
Boatright said the law sets forth no requirements on the use of the money. Nor will the Internal Revenue Service trace the use of the money.
The amount of the home equity loan, however, cannot exceed $100,000 or the fair market value of the home.
Paying estate tax
Q: My parents' estate has been settled, and the taxes have been paid. There are six of us children. We have sold two residences, and we have property to sell in the future.
What kind of taxes do we need to pay? Since this is an inheritance, I assumed there were no taxes, but I'm told that's not correct. I don't know where to do my research.
A: The executor or administrator of an estate is legally responsible for paying all taxes due on that estate before distributing what is left to the heirs.
You will have to pay taxes only on your earnings after the date of death.
For instance, a piece of property might be valued at $100,000 at the date of your parents' deaths. If you sell that property for $120,000, you will owe taxes on the $20,000 profit - or any other gain over the appraised value at the date of death.
As another example, a decedent may have left a bank certificate of deposit that paid interest or stocks that paid dividends subsequent to the date of death. This is your profit, and you will owe taxes on that amount.
by CNB