Re: New to REI, Questions. - Posted by John Smith, IV
Posted by John Smith, IV on September 30, 2003 at 23:35:30:
Well, lets take this one by one.
#1 Income Taxes- These are part of your expenses. They are paid only on net profits though. In other words, if you end up making money, you pay income taxes. If you don’t make money then you actually reduce your income tax burden since you will show a loss somewhere.
On the other hand, you only should pay income taxes if you are liable for the specific tax. Is your income taxable? Take a look at www.taxableincome.net
#2 Property Taxes- If you buy the property with a mortgage, it will most likely be added to the mortgage payment just like your home’s mortgage.
If it is seller financed, then it depends on the contract that you make with the seller. If you want to pay it monthly and you stipulate in the contract that you will pay X amount, then the seller has to turn around and make the payment for you.
If you have the discipline for it, you might be better off opening an account (like a money market account) where you deposit the amount and then pay the taxes once a year out of that account. The benefit of this would be that you make a little on the interest paid on the account. Every penny counts.
You said--------------------Another Mortgage to pay off the owner. – Does this techique work? Taking out a second mortgage to put money in the owner’s pocket and then paying it off yourself? Wouldnt the owner have to take out the second mortgage, and wouldnt the owner consider it a risk?>>>>>>>>>>>>
I don’t understand what your question or proposed technique you are talking about here.