Intangible Tax on long term loans in Georgia

[Jared Orme]

The ‘newish’ intangible recording tax in Georgia (and coming to a state near you if not already) is a tax upon any long-term loan that involves real estate.

Given that many of my deals are owner financed, this additional cost represents thousands of lost dollars and a huge upfront cost increase for when I source no money down loans.

I have several real estate lawyers who suggest ballooning the loan at 35 months to then have the seller keep renewing it. This is completely legal as a part of the excemptions from the tax.

My question is for anyone that has developed this work around and are using it or even if you might have some suggestions.

Example: Buying a property for $179,000, no money down over 30 years. This requires a intangible tax of $537.

If the buyer does write a note with a balloon at 35 months what is to be certain a renewal will occur? Can I write a clause into the note that, I have the ability to action the renewal? Or in otherwards if I cannot secure financing for ANY reason the seller must renew?

Would this be valid?

This is especially challenging if there is capital improvements upon a particular property I purchase and the seller stands to make out significantly to force me into default.