Question on purchase

[Mark Betche]

I hope I'm in the right place, it has been a while since I have visited.

I am making an offer to my uncle on a building I rent a portion of. I have rented this area for 18 years from him.

The roof is in need of much repair and he does not want to invest money into the roof. I want to buy 30% of the building with my past rent as an consideration and invest approximatly 20k into the roof and other needs.

I am offering him this deal for 30% ownership in the property. I have requested a par value estimate of the building at 120k, my area would be about 30% of the property. This arrangement is to protect my investment into the property.

My question is: What are the tax implications of this arrangement?
And, what other considerations do I need to address?

[Bill Gulley]

Hi, several good points made above. However, doing a minor subdivision and possible construction to have clear title to the existing property might cost more than the roof. I'm assuming that you're wanting future appreciation, otherwise the easiest way to get what you want is simply to do a long term lease and make a future advance loan on the property for repairs. In your lease, provide for your ability to make repairs and expenses to the future advance note. This protects your cash investment and a rate of interest that can do several things; discount your lease payments, reduce any escalation of future rents, establish an option price for an ongoing renewable option. How old is your uncle? How the property is currently held and your family relationships all have a bearing on which way to go. A 99 year lease could probably give you more control than a thirty per cent undivided interest. You could have the right to do maintenance and repairs on, under or over that area defined in the lease. A dollar amount of improvements could run with an option to purchase and be refunded under the option or a note in the event the family wanted to sell and you did not buy it, a per centage could be returned to you upon the sale. You don't have to hold title to property to control it, use it or gain a benebfit from appreciation! Bill