which approach is better?

[Katy Nguyen]

Hi everyone.  Which case would be better for you if you were the buyer?  To record this property sold at $50k or at $110k?

Case 1:  The seller wants $50k in his pocket after COE.  He owes $60k for a lien on the property.  I draft the purchase agreement at $50k, and in that contract, I state that I, the buyer, will pay off the $60k lien for the seller at closing.  When the title company goes to record the warranty deed, it states that the "true consideration for this conveyance is $50k".  But on the final settlement statement, it shows that the amount I sent to the title company was $110k (let's disregard the title/escrow fees, etc., for the sake of argument).

Case 2: I draft the purchase agreement at $110k, and in that contract, I state that the seller will pay off his $60k lien at closing. When the title company goes to record the warranty deed, it states that the "true consideration for this conveyance is $110k".  And on the final settlement statement, it shows that the amount I sent to the title company was $110k (let's disregard the title/escrow fees, etc., for the sake of argument).

The property is a vacant lot.  In the eyes of the IRS, did I purchase this property at $50k or $110k?  I figure if I go with case 1, the County or City might charge me less for property taxes.  Is there any major disadvantage for me if I choose to go with Case 1?  From the perspective of the buyer, which case is better and why?  Thanks.