Buying 0 down, repair credit, taxes - Posted by Ralph Kaz

import · August 11, 2003, 10:49am

Posted by Ralph Kaz on August 13, 2003 at 13:53:31:

bump…

import · August 11, 2003, 10:49am

Posted by Ralph Kaz on August 11, 2003 at 10:49:01:

I recently rehabbed a 2unit property and I’m selling it to another RE Investor. Sales price is $99k, but the buyers want to put $125k on the contract and have a seperate agreement to credit them $26k after closing. This way they can buy with no money down assuming the property will appraise accordingly. They want the $26k to be written up as a “repairs” credit.

My question - is the $26k fully tax deductible for me? I’m going to be forced to pay over 30% in short term capital gains on this property (profit will be around $45k before taxes) and don’t want to pay taxes on the additional $26k.

Does anyone have any idea’s how to minimize the capital gains tax on this rehab? I need to pull the money out to use it for a personal residence we are building, so lease options wouldn’t work. Can you 1031 into a personal residence - maybe if I titled the new house a certain way?

Thanks in advance for your help.