Posted by Natalie-VA on May 19, 2006 at 08:07:49:
Good plan Charles, but don’t you mean tax deferred?
–Natalie
Is this legal? Is it ethical? How do i do it? - Posted by Brett
Posted by Brett on May 18, 2006 at 16:58:50:
Hey everyone, this question is for all you pro’s out there who have been making money in RE before I was enjoying my Gerber bananna mix. Here’s the deal…
I have been leasing an investment property for over a year now. I was subleasing on a rent to own basis. The tenant buyers moved out, so i put it on the market to resell as the owner/deedholder has agreed to sign deed over to me. I already have solid offers that will net me about 15-20 thousand in profit. My problem is I need the money ASAP and dont want to pay all those taxes for the quick flip. Here is my question. Is there any way the buyers could write me a check for my 15,000, then just assume the loan from the deed holder? This way i can keep most of the 15,000 and get it in a couple of days. On paper it would look like they just assumed the loan but in reality they gave me my profit first. How can I set this up? I dont want to be unethical and if this is then I wont do it, but I am curious. Could I call it a finders fee or something liek that? The buyers are willing to do this. What contract or writtend agreement could we come up with so they would give me the profit and then promise to buy the property no matter what? I know this is alot, but I need some help. Thanks for your time.
Re: Is this legal? Is it ethical? How do i do it? - Posted by Charles Parrish
Posted by Charles Parrish on May 18, 2006 at 23:44:51:
If you have $20,000 potential, consider going to settlement, over finance, take $10,000 for some tax free spending money. Give the tenant a new lease with an option to purchase at an agreed price, when the option is exercised, within 6-12 months, elect to do a IRC 1031 Exchange.
Your profit is now tax free and you would have increased the value of your personal real estate portfolio.
Taking the $20,000 as you suggested would give you only temporary pleasure and the retirement of some debts, (not taking into consider the pumping of your ego) and in a blink, the money is gone. The other way, you have the pleasure of $10,000, your mortgage paid by the tenant and bigger and better future property, all tax free.
Charles Parrish
Re: Is this legal? Is it ethical? How do i do it? - Posted by Brad Crouch
Posted by Brad Crouch on May 18, 2006 at 23:06:49:
Brett,
Why can’t you simply assign your master lease, for a fee?
Your proceeds will still be “income”, and you’ll eventually have to pay
taxes, of course. But not immediately.
Your master lease IS assignable, isn’t it?
Brad
Re: Is this legal? Is it ethical? How do i do it? - Posted by David (Los Angeles)
Posted by David (Los Angeles) on May 18, 2006 at 19:06:59:
Whether you call it a finders fee or something else, it’s still income, and you’re still going to owe “all those taxes”.