All Forum Posts by: Bill Walston

If I assigned a lease option to a tenant buyer and the tenant buyer doesn't pay the monthly payment, wouldn't that put the owner of the property in a bad situation?

Now if i did a sandwich lease option and my tenant buyer doesn't pay I can just evict him and put someone new in his position right?

Yes, and yes. In the former scenario the seller (owner) of the property would have to evict. He/she may still call on you to find a new tenant/buyer. In the latter scenario you are responsible for both evicting the current tenant/buyer and finding the replacement.

0 Votes

Originally posted by Bart J.:

Here it is and he will not talk about any BK pros or cons on the phone and he will not discuss my case with anyone.

Larry H Parker
1150 South Olive Street
Suite 2000 - PMB# 800
Los Angeles, CA 90015

I suppose he wouldn't since BK and RE are not listed as his areas of practice. Personal injury does seem to be one of his specialties however. That and being known as the California Dog Bite lawyer.

2 Votes

Originally posted by Bart J.:

Bill,

Very good point, if the consumer is filing a BK how are they going to hire a lawyer to do appeal?

They can file their own appeal just as they can file their own BK. But I doubt they would have to as I don't think a BK judge is going to rule against them.

0 Votes

Originally posted by Bart J.:

Bryan here in California the judges will do what they want to do.

While CA does seem to be a "world unto itself" I'm quite certain that judges don't do "what they want to do." They rule according to law - unless, of course, they want to be over-turned on appeal.

0 Votes

Originally posted by Ebere Okoye:

Originally posted by jeremy Salvador:

Thanks Loc - I've never heard of doing a Land Trust with your LLC as the beneficiary. I'm going to have to look into this. It seems that solution would provide both liability protection and keep profits off my personal return.

A land trust is some cases are disregarded entities so will still need to pick up income in tax return. I would say go the LLC route if you will have passive activity losses but if you cannot deduct that or you will have passive income, then I can see your point on the C corp but proceed with extreme caution

Holding real estate in a C Corporation is a terrible idea. C corporations are ideal for property management companies, or to manage an LLC or act as the general partner in a limited partnership. In some cases it makes sense to use a C Corporation for your "flips." I almost NEVER recommend a C Corporation for holding rental property.

And while the LLC will offer liability protection it will not keep the income/expenses off of your personal return unless you elect to have it taxed as a corporation.

0 Votes

Originally posted by Chris Martin:

Originally posted by Sharad M.:

Hello all,

I wanted to see how you guys are dealing with accounting issues of owning multiple LLCs? Do you have a separate bank account for each LLC you own? Or you have a main bank account for the primary LLC and use the other LLCs as holding companies only?

I have two LLCs and I own multiple properties in each of them and I am not sure if I should maintain two separate bank accounts or I can use one bank account for all transactions and use the second LLC as a holding company only?

Thanks!

So to answer the question, each LLC must have its own separate bank account. Each LLC has its own EIN. Each LLC will file taxes independently of each other LLC.

Not really Chris. There is no requirement that an LLC even have a bank account. One LLC can receive and deposit the cash and make all disbursements for the other LLC's. (There is an IRS requirement that your accounting records properly reflect the income and expenses for each property separately, but that's another issue.) Each LLC will be required to have its own EIN if it is taxed as a partnership or corporation. If you opt for it to be taxed as a sole-proprietorship you may use your social security number or apply for a separate EIN.

0 Votes

Originally posted by J Scott:

Originally posted by thomas dionne:

If they say yes and agree to sign a contract I have a lawyer modify/draw up...

That contract sounds a lot like a listing agreement from a broker entering into an agency relationship with a seller.

I'm certainly not an attorney, but I'd think this would very much be encroaching into "licensed agent" territory...

I agree. And I don't like the idea of asking the seller "what if I find you a buyer." YOU should be contracting with the seller with the right to either sub-lease to your tenant/buyer or assign your option. Finding a buyer for anyone other than yourself is definitely the function of an agent.

3 Votes

Originally posted by George P.:

Originally posted by Marc Faulkner:

I am not a tax pro but, in my opinion the seller can avoid the capital gains by doing an installment sale and taking back a note as long as the seller is not considered a "dealer" by the IRS. The payments they collect from you will be taxed as regular income at the end of the year the payments are collected vs. paying tax on the entire gain in the year of the sale.

Thank you Mark - I have been trying to find a proof of this, cause I heard it before, but to no avail.

You most likely cannot find the "proof" because it's not quite correct. The capital gains are not truly "avoided," they are simply deferred and paid over the life of the financing.

The payments collected are not "taxed as regular income." The payments collected consist of non-taxable return of capital, captial gain, and interest. The capital gains will be taxed at the current capital gains rate and the interest will be taxed as ordinary income.

4 Votes

Originally posted by George P.:

Does anyone know what (if any) issues might the seller encounter if he/she finances the property with 0% (or 1-2-3%) loan?

The first that comes to mind is the imputed interest covered in IRC 483. The IRS will impute (assume) interest if none is charged by the seller. You can find the IRS rates HERE.

3 Votes

Originally posted by Homer S.:

so, i looked into this a little deeper and here's the questions i have:

1. I am running my rentals as a LLC, thus I do not have a federal tax identification number. When I am filling out the 1099, do I need to provide my Social Security Number in the field for Payer's Federal ID? I hate to have to disclose my personal information to all the contractors I work with, but I am not set up as a partnership or a corporation so I have no other tax identifier. What are your thoughts on this? I really dont like giving my SSN willy nilly.

As Steve said, you can apply for a separate TIN for the LLC. In fact, you are required to have a separate TIN if you have employees. You can use that TIN when issuing your Forms 1099.

Originally posted by Homer S.:

2. Will the contractors get double taxed? will they get pissed off when i ask them/

No, the contractors will not be taxed twice. They report the income only once. The Form 1099 is only supporting documentation required by the IRS.

1 Vote

All Forum Posts by: Bill Walston

Bill Walston has started 0 posts and replied 426 times.

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