All Forum Posts by: Ivan Smith

Great thanks for your response I was thinking the same thing. 

Trying to sell our home in phoenix az area and not getting offers so the agent said we should offer seller financing as it will bring in buyers. It was our personal home and a little over 2 years ago we moved out of state and rented it out in March 2021. It's getting close to that time where we would have to pay capital gains if we don't sell it now. House has been on market for 3 weeks and no offers. After reading a few articles about seller financing I'm just more confused.

House if for sale at 725k right now. Offer came in:

Purchase 750k, down pmt 60k. 3% interest balloon pmt at 15 yrs. Monthly pmt 1725 interest only. To mee it seems like we should just lower price and sell and not get involved in this.

Question:

1. what would be a good offer for me as seller? 2. Would I have to pay capital gains since I'm technically still the owner and ill own it past the 5 yr rule?

3. How should it be legally structured? (Land contract or contract for deed or deed of trust?

4. What are my risks as seller ? I heard if buyer defaults it costs thousands and years to foreclose on buyer. Also Dodd-frank rule says I have to ensure that buyer can afford the mortgage or I face fine of 3 years of payments?

5. Do these mortgage payments count as income and I have to pay taxes.

6. How is down payment treated for taxes?

7. Any other things I need to be aware of?

8. Do attorneys structure the deal or realtors? Who pays for attorney?

Thanks. Any feedback appreciated

Great thank you, exactly what I was looking for. 👌 

@Dave Foster last question, if we airbnb or rent it out for a full year will it be enough time before we can convert it to our personal property? Is it a 1 ot 2 year minimum. And when we move into the property do we need to sell it to ourselves or file any paperwork? Does it trigger some accounting irs event like having to repay depreciation we claimed on the previous property before we 1031 it? I remember you can screw up on these 1031 where you have to repay depreciation you claimed? Let me know if you are familiar with this thanks

@Wayne Brooks Thanks

@Dave FosterGreat thank you for clarification, lots of decisions to make in next 2 days. At this point we are leaning towards just paying the taxes on the sale of the property and use cash to buy personal residence instead of trying to rent to ourselves via llc 😔

@Dave FosterThanks for taking time to respond.

Just to clarify the same llc that owned the previous property we are trying to 1031 will buy the house. That llc files a business tax return. Does that make it a regarded entity? Can we do it if it is?

I'm trying to understand your last paragraph where you mention how to legally do it....you said complete 1031 , then sell and buy as same payer. Do you mean finish buying the house then rent it out to someone for a year and then buy it from my own llc.? Please explain when you get a minute.

Also is there a way to extend the 1031 discovery period? What if we Interested in a property and identify it as property we want to 1031 and the the deal falls apart do we pay full taxes on the property we sold?

Thanks

I have a question in regards to us getting a property and doing it correctly. We are actually closing on it this week and were under impression that we cud put the house into our llc and rent from the llc. then potentially rent it out or sell it, or sell it to ourselves and turn it into personal home. We are in a time crunch as 1031 property identify period is ending and we are loosing our current lease we live in.

We sold a problem property and would see about 120k profit, so because sales tax would be significant we are doing 1031 exchange and putting the proceeds into this property then adding cash and buying it under LLC.

Idea was to rent it for a year or 2 then do smth else with it. Talked to 2 cpas both say we can't do it and it will probably get audited as it will be in fact our personal residence. If we get audited then we would have to unwind 1031 and pay a bunch of fees and penalties on top of taxes

If someone knows of a legal and correct way of doing this and still be in compliance with tax rules etc please advice asap. Thank you.

Thanks! thats pretty much the structure that was suggested, so can i set up the structure myself? Like create series llc (how do i do that?), then associate other llc to that series llc ( how do u do that, i think u said land trust, what type of attorney should be doing this and what would be a good price for this service?), then move personal properties into newly created llcs (again how do i do that?) And then into same series llc.... so what portions can i do myself and what needs to be farmed out to an attorney? Then do i have all tenants resign leases with the new series llc? All properties are owned outright so hopefully that makes things easier... Do i need to set up anything specific when creating these llcs for tax purposes or just do regular llc? Thanks

talked to the cpa he suggested that i need to set it up where all my llcs that own properties are managed by another llc that would take care of leases and rents etc and flow everything through to me eventually. but i dont think he knows how to do that 100% and how to unwind the mess i have now.