Cap Gains - Payoff - Fraud? Confused - Posted by Liam

Real Estate Investing Real Estate Law
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Posted by Liam on July 28, 2003 at 13:31:22:

Thanks for the reply. So, the concensus is that my lender is encouraging me into a fruadulent transaction? Guess when enough voices talk, they ought to be listened to. Thanks

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Cap Gains - Payoff - Fraud? Confused - Posted by Liam

Posted by Liam on July 24, 2003 at 12:18:07:

I have a current owner finance situation on my residence and am refinancing. I owe $60,000. The lender suggested I get a note from the current owners that my payoff is $85,000. They could then refinance for the $85,000 instead of 80% of the appraised value. (Texas home equity laws) The appraisal on the property in not in yet. The current owners of the property would then take the $85,000, cut me a check for $25,000 (less closing costs) and they be paid, I’d have $20k in my pocket and be ready to close another home. (Yes, the current owners will do this - and sign the papers to make it safe.)

This is a 3 fold question.

  1. Is this a fruadulent transaction? My attorney hasn’t come across this situation, and isn’t much help.
  2. How should the contract between myself and the current owner financers be worded to avoid capital gains? My accountant considers the $25,000 back as cost of sale, but since I already bought the house…
  3. Is there someone versed in contract who can work this through? A referral might really help, here.

This is all in Texas.

THanks!

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Re: Cap Gains - Payoff - Fraud? Confused - Posted by Nate(DC)

Posted by Nate(DC) on July 25, 2003 at 08:04:48:

  1. I certainly think so.

  2. It’s borrowed money, therefore no capital gain due…

NT