Posted by ToolBar_SC on March 27, 2001 at 16:17:50:
NT
HELP!! Weird situation - Posted by Scott SC
Posted by Scott SC on March 27, 2001 at 12:20:09:
I’m in partnership on a house with a guy. This guy also owes me $5,000 on a seperate issue. I need the $5,000 NOW so I can do some other deals, but he says the only way he can pay me is if he buys me out of the house we have a partnership on.
That sounds all fine and dandy and we started the process. We are into the house $45,000 (subject to) and the most we can get financed is $50,000. The house is worth about $52,000 although the appraisal came in at around $58,000. The guy is a broker so he was somehow able to get someone who would finance the house based on the appraised price.
We tried to sell the house but no luck and I don’t have time to wait on a lease optioner to buy the house. Plus, I really want out of a partnership with this guy before it gets ugly.
Now, I would be fine to let him buy the house for $50,000 and pay off the underlying loan of $45,000 and give me the $5,000 left over, BUT that still means I would have to pay taxes on the $5,000. That makes the deal sour to me. That would be $1400 I would have to pay at the end of the year which I would not have had to pay if he just repayed me the money he owes.
Is there some contract that I could get him to sign that would make him responsible for the taxes on the gain?? The deed is actually only in my name but we do have something signed that says he owns half of the property.
I’m getting to the point where I’m going to have to go to a lawyer and sue the guy for $5,000 if something doesn’t get resolved. Do you guys have any good ideas about what I could do?? This house is a good rental but got absolutely NO attention when we put it on the market to sell.
I need to hear some good ideas from you pros out there!
Re: HELP!! Weird situation - Posted by ToolBar_SC
Posted by ToolBar_SC on March 27, 2001 at 15:05:34:
I’m not sure I understand how he’s paying you back $5K. You say the underlying loan is for $45K and you would let him buy for $50K. If you are partners in the house then $2,500 is your share of the partnership sale and he would only have $2,500 to pay on the $5K he owes you. Your taxable profit on this deal should only be on $2,500 and he’s taxable portion is the other $2,500. Since you didn’t explain the situation on why he owes you $5K, I don’t know if there is any tax owed, by you, on what he pays you on the debt. At any rate it appears that he is paying you what he owes you using $2,500 of your money(profit you should have recieved on the sale). Doesn’t sound fair to me.
I don’t know of any contract or document that he and you could sign that would make him responsible for your taxes. I believe the IRS is only going to look at you for payment of taxes owed on any profits that you made. They aren’t even going to entertain trying to go after someone else for taxes on profits you receive. Now if there is any paperwork that shifts the tax liability from you to him, a reputable tax attorney would have it. Go seek their advise.
Lots-O-Luck
ToolBar_SC
P.S. Where is SC are you located?
Re: HELP!! Weird situation - Posted by Scott SC
Posted by Scott SC on March 27, 2001 at 15:48:23:
Thanks Toolbar.
I am willing to get out of this deal with JUST the $5,000 he owes me, I want no profit from the sell of this house. I simply want out of any future deals with this guy. In other words I’m willing to pull out of this house with nothing, just the $5000 he owes me.
We used to do a good bit of business together and I lent him $5,000 to start up his own business. A simple loan to which I have a note on. Sueing him just doesn’t make since because it’s a lot of time and money and because we own an investment house together. I would much rather collect my money from him in a business like matter even if it means making no money on this investment home. There are too many deals out there to get caught up with this one.
I’m in the greenville are, how about you?