DEAR BOB: My husband and I recently purchased our first home. Although we both earn good money, our credit isn't so good. On the advice of our mortgage consultant, we obtained an interest-only 100 percent mortgage in my father's name. Both of our names are on the title, but not on the mortgage. It was explained to us that in six months my father would sign a quitclaim deed and title will be in our names alone. Can my husband and I claim the tax deductions on the house although we are not listed on the mortgage? We will be making the payments. To do a quitclaim deed, must we refinance the mortgage in our names at that time? --Josette R.

DEAR JOSETTE: Because your names are on the title to your personal residence, you are obligated to pay the mortgage and property tax payments or lose the property by default. Therefore, you are entitled to claim itemized income-tax deductions for the mortgage interest and property taxes you pay.

Your name need not be on the mortgage obligation. Millions of U.S. homeowners own their homes "subject to" an existing mortgage that is not in their names. But they are the "beneficial owners" entitled to the itemized tax deductions for the mortgage interest and property taxes they pay.

However, you should get your father to sign and notarize the quitclaim deed now so it will be ready for recording (just in case anything should happen to him). For more details, please consult your tax adviser.


DEAR BOB: I own a beautiful old oak tree which overhangs the lot boundary with my neighbor. While we were away on vacation, he trimmed it back to the property line. Now the tree looks awful as it is unbalanced. When I confronted him, he said he was tired of the mess the tree made on his property. Does he owe us damages? --Margo W.

DEAR MARGO: Perhaps. The general rule is a property owner can trim a neighbor's overhanging tree back to the property line. However, the tree trimming must be done with care so the tree does not die as a result.

If your tree dies due to the neighbor's severe trimming of the overhanging branches, you could then sue him for the lost value of the tree. Let's hope that doesn't happen.


DEAR BOB: Does the 12-month long-term capital gain period for real estate begin to run when a firm purchase contract is signed by both parties or does it start on the date of the actual closing of the sale? --Bill B.

DEAR BILL: The 12-month long-term capital gains real estate holding period starts when the buyer becomes the beneficial owner with rights and obligations. This is usually the date the sale closes and the deed is recorded.

The date the purchase contract was signed is irrelevant. For full details, please consult your tax adviser.