When A Neighbor's Tree
Uproots Your View

Question: My neighbor's house is terraced down from mine. The neighbor's wall is set back from the property line by about eight feet. In the area between our property line and his wall is a pepper tree that has grown so large that it blocks our view of the valley below. The tree was not a problem when we moved in about four years ago. The neighbor refuses to trim or remove the tree. Any suggestions?

-- Steve, Grand Terrace, Calif.

Steve: You've got one of those infuriating view problems which often happen and don't have easy solutions. These typically occur on property that's built on a hillside. When the owners first move in and trees all around are small, the views can be terrific. But as years pass and the trees grow taller, that view diminishes until it may be completely obscured.

The problem is that in California (and elsewhere), the title to your property normally doesn't mention a view. Rather, it gives you ownership to the land and whatever you build on it, straight up. Looking across your neighbor's property isn't mentioned. What that means is that you don't have a right to a view.

Since you can't easily demand that your neighbor trim or cut down the trees (some people have gone to court over this in some very nasty and expensive fights), the next best thing is to grovel and beg, not literally, of course, but you may want to approach your neighbor and politely explain your problem. You may offer to pay to have the tree trimmed. Or you may offer to pay to have the tree removed and replaced with a shorter one.

Be very careful about doing anything to harm the tree. If you cut down your neighbor's tree, you could be liable for up to three times the cost of having it replaced. If you trim the tree without his permission, you could also land in hot water.

Try the carrot and not the stick.  It's probably your best approach.

Question: I'm over 60 years old. I bought my home for $42,000. Its cost basis is about $68,000.  My home would likely sell for about $650,000. Is there a way to avoid paying the huge capital-gains tax I'd incur if I sold it?

-- Ruby, no location provided

Ruby: Assuming you have lived in and owned the home for the past two out of five years, you probably would qualify for the up to $250,000 capital-gains tax exclusion (up to $500,000 if you are married and filing jointly). That should help you save a bundle.

Of course, even if you can take the $500,000 exclusion, it looks like you'll still have some capital gains on which you'll probably owe tax. Obviously, you'll owe even more if you're able to exclude only $250,000 in gains.

However, don't be dismayed. What many people forget is that the capital-gains tax rate (around 15% for most people), is actually quite preferable to the ordinary income-tax rate, which can be more than twice as much depending on your income. Indeed, some tax shelters are based on converting higher ordinary income taxes to the lower capital-gains rate.

An alternative to selling if your aim is to get cash out is to refinance your home and then rent out the house to help make the payments. You should be able to pull at least 80% of your equity out of the property, provided you can qualify for the mortgage. Refinancing does not normally trigger an immediate tax consequence.  However, when you sell, you'll still owe tax on the large gain.  And if you haven't been living in the property for the requisite two out of five years, you won't be able to get the benefit of the capital-gains exclusion.

The bottom line is, to paraphrase poet Robert Frost, sometimes the best way around a problem is through it. Even if you do have some capital-gains tax to pay, it probably won't be an enormous amount, given the wonderful appreciation you've had over the years. It may be best just to take the hit. Check with your accountant for exact amounts.

-- Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent books are "How to Get Started in Real Estate Investing" and "How to Buy a Home When You Can't Afford It" (McGraw-Hill, 2002).

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