Posted by Bud Breanstetter on May 06, 1999 at 17:26:11:
This is the type of deal that if done with a bank loan could be considered fraud. With a typical 100K property your partner would have shown 100K on the 1099( less the fix up your 10K credits on return). He would also have to show as an instalment sale and the sale of the note. Your basis then becomes the actual costs. If your partner(or you) acted as broker and sold to the institutional buyer you would not have to discount as much.
Reverse Flip-need advice on capital gains - Posted by breeves
Posted by breeves on May 05, 1999 at 20:49:38:
I am buying a SFH and Townhouse. My partner is buying from orginal seller at 80% of FMV and I am buying from my partner at FMV. Partner is rebating back difference to me as repair credit. My partner is creating a note for 90% of FMV, I’m putting down 10%.Note will be sold at closing for 91%. Partner receives proceeds, pays off original seller and gives me the difference. Partner is a freind not in real estate business and not expecting a profit. This is the procedure the note buyer suggested, and all funding is approved. My question-is the above adequate to allow the Partnter to escape capital gain treatment? Are there any other consequences to Partner?
I’m opening escrow tomorrow with signed contracts, all responses are appreciated.