Resale Taxes??? - Posted by Tommy

Posted by Tony Colella on April 06, 2006 at 21:39:23:


Thanks for locating and posting these links. With gratitude to you, I am going to repost them under a title that is easier to find than “insomnia” that most would not naturally search under.

Thanks Jad.


Resale Taxes??? - Posted by Tommy

Posted by Tommy on April 05, 2006 at 17:17:38:

Hypothetical scenario:
I buy a MH for $1000 and sell it for $3000.
I pay Capital Gains Taxes on $2000, due in same year as sell.
My buyer defaults and I get the MH back.
I resale the MH for $3000.
How is the tax assessed for the second sale?
What if MH is resold during same year as original sell?

Re: Resale Taxes??? - Posted by Bill (in GA)

Posted by Bill (in GA) on April 05, 2006 at 17:38:27:

Let’s test my “knowledge”… Not 100% on each of these, but maybe someone can clarify my thoughts and provide corrections where necessary.

  1. I don’t think you would have capital gains tax on the first sale. Would that you could be so lucky! I believe the sale is treated as regular income.

  2. If you have notes receivable but aren’t doing high volume business, you can use the cash method of accounting rather than the accrual method. In this case, you can pay taxes only on monies you collect, in the year you collect them. Search the archives for “jhyre tax cash”. The very first post that appears gives compleat info. I looked up the tax laws involved, and it looks like it’s legit.

John Hyre (JHyre) sells RE accounting and entities courses. They are quite well rated throughout the forum, and have MH-specific parts.

  1. Your second sale is just another sale, irrespective of what year it’s sold again. It does not matter to the revenooers that you’ve sold the same item again. You can probably deduct any losses incurred against your current year tax liability, and the cost of reposessing the home. It will probably all just balance out in this way.

Again, I’m not a competent authority in any of this. I just want to know if my understanding is correct. Point-by-point, comments, anyone?

  • Bill (in GA)

Re: Resale Taxes??? - Posted by JeffB (MI)

Posted by JeffB (MI) on April 05, 2006 at 19:21:29:

Point 1 - Bingo!

Point 2 is not entirely correct… tax is not just on the monies you collect. I would explain in more detail but I have one damaged finger here that severly hampers my typing ability. Not a huge deal but probably worth understanding if one plans to use this method.

Regarding #3, I think is not just another sale (you must track the basis in the home I believe), but again an archive search will yield the correct information. I do not have personal experience with this.

Re: Resale Taxes??? - Posted by Bill (in GA)

Posted by Bill (in GA) on April 05, 2006 at 22:12:41:


Thanks for the response. I can sympathize, I just had surgery on my left middle finger last week, takes most of my hand out of commission.

  1. Okay, can you verify this… Your initial tax hit on cash method is based upon fair market value of the note, not the face value, minus the initial investment. You determine fair market by offering to sell to various note buyers (!) even though you have no intention of selling. Seems disingenuous, but that’s what I’m understanding from the archives. Nonetheless it is a much lower tax liability than if you had to go against the stated sale price minus initial investment.

  2. I’ve actually seen this in the archives, but after an hour of scanning, I’m giving up. I figure if I’m selling the same property twice in the same year, even if I’m paying more tax it’s got to be good for me somewhere, I’ll let an accountant straighten out particulars.

I can tell you, it’s frustrating when you have to five-finger type with one hand, and hunt-and-peck with the other! Thanks for the effort.

  • Bill (in GA)

Re: Resale Taxes??? - Posted by Tony Colella

Posted by Tony Colella on April 06, 2006 at 09:17:24:


Hyre covers this is detail in his course (no longer for sale at this site however).

He once wrote a post here titled something like “insomnia” but I wasn’t able to find it in the archives this time. I did find a similar post

Perhaps that post or more time spent in the archives can come up with the insomia post.


Re: Resale Taxes??? - Posted by osupsycho (OK)

Posted by osupsycho (OK) on April 06, 2006 at 19:57:33:

Here are the links:

I would also suggest typing “John Hyre” in google and seeing what you get…