I bought a house preconstruction for 628k...it just got being done built june 1st. Its currently selling for 707k. The new models. I got an offer for 717k for my house. There is also a 50k penalty for selling or renting within the first year. If i take the offer we are going to do a lease to buy option where nothing comes out of my pocket for expenses. I also do not have to pay a broker, real estate agent because i am an liscense RE agent and the buyer is being represented by my aunt who is a broker and owns her own company. My payment on the house is approx 4500 per month 5.375 on 80% and 7.0% on 20%. I believe the place where this property is at will increase to atleast 825k by june 2006 and 750k by the end of this year. The 4.5k a month payment doesn't bother me at all and the home would remain empty till the one year mark and just used as a kind of weekend home. On one side i can sell it and make about 90k but be taxed at pretty much 50% or i can hold on to it till the one year mark is up or even 2 years so id on't have to pay tax. I am also claiming this as my primary residence. I also have another house that i rent out and live at home with my parents. The property is in the san francisco bay area. Any suggestions or comments on what i should do?
Users like you can add images, links and other relevant information about this topic.
posted: Jun. 25, 2005 @ 2:53a
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 2:57a
Luniz97 said: I bought a house preconstruction for 628k...it just got being done built june 1st. Its currently selling for 707k. The new models. I got an offer for 717k for my house. There is also a 50k penalty for selling or renting within the first year. If i take the offer we are going to do a lease to buy option where nothing comes out of my pocket for expenses. I also do not have to pay a broker, real estate agent because i am an liscense RE agent and the buyer is being represented by my aunt who is a broker and owns her own company. My payment on the house is approx 4500 per month 5.375 on 80% and 7.0% on 20%. I believe the place where this property is at will increase to atleast 825k by june 2006 and 750k by the end of this year. The 4.5k a month payment doesn't bother me at all and the home would remain empty till the one year mark and just used as a kind of weekend home. On one side i can sell it and make about 90k but be taxed at pretty much 50% or i can hold on to it till the one year mark is up or even 2 years so id on't have to pay tax. I am also claiming this as my primary residence. I also have another house that i rent out and live at home with my parents. The property is in the san francisco bay area. Any suggestions or comments on what i should do?so many problems with this I cant even begin... but good luck! Besides your family members, can we presume theres no professionals involved in advising you on this near million$ transaction?
Any reason why you didnt post this in the investment property thread?
oelephant
Senior Member
posted: Jun. 25, 2005 @ 2:57a
Luniz97 said: I am also claiming this as my primary residence...and live at home with my parents.
So you are saying that you intend to commit tax fraud? Is that your point?
okay besides the point i can move into so its not fraud.
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 3:18a
Luniz97 said: okay besides the point i can move into so its not fraud.If you want to claim the 250k cap gains exemption, it cant be a "weekend" house...the fact you "COULD" move in or that its not occupied by someone else doesnt help you either.
But dont believe us, consult a pro and report back what they say. Youre talking about potentially hundreds of thousands of dollars of YOUR money , not ours. Its up to you to be foolish or wise.
ok well if i don't sell it i will be moving into the property
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 3:21a
Luniz97 said: ok well if i don't sell it i will be moving into the propertyyou still dont get it...and its a shame too - you have the right connections, minimal/no cash outlay , and rapid appreciation all working in your favor.
Properly structured, this could be a goldmine. But from whats been posted, it has NOT been structured correctly, you are bleeding thousands per month, you plan on bleeding thousands more with an unoccupied property that has $5k+/month expenses (mortgage, taxes, insurance, etc), AND acting as if you know the ways "around" things, yet deep down you realize there are issues with which you need help.
You NEED (not "should have", not "might want to find") a good tax pro, and possibly other professionals to advise you. And while getting basic suggestions here is good, you need advice SPECIFIC to your properties. A pro needs to sit down with you and the relevant documents.
Also, dont discount the comments you get here because you dont like what you are hearing!
Well lets see...my plan if i don't sell the property is to move into it. It has always been my plan too, but the opportunity to sell it has come.
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 3:40a
There's no use trying to "backpedal" and think of ways to explain this away....you have already posted you are claiming, or plan to claim 2 different homes as your primary residence, NEITHER of which you actually live in. You are/will be cashflow negative on each one, for a year or more. Lets not even GET INTO the insurance nightmare of an unoccupied property.
You know you need to avoid big tax hits, but havent given sufficient thought to making sure things are structured properly. Why the refusal to sit down with a tax pro? You have a fairly complex situation, and 2 properties worth in EXCESS of $1million - this cant be adequately handled by an internet forum.
have you ever considered that you might do much better by truthfully claiming one of both of these as investment properties....if you read the investment property thread in this forum, you would have learned of some of those benefits ($25k deduction off earned income, 1031 taxfree exchanges, etc)
I do own 2 residences. One home is my rental property and claim as a investment and the 2nd is the new one that was built which is the one i probably will move in unless i can convince myself to sell it.
didYOUsearch said: There's no use trying to "backpedal" and think of ways to explain this away....you have already posted you are claiming, or plan to claim 2 different homes as your primary residence, NEITHER of which you actually live in. You are/will be cashflow negative on each one, for a year or more. Lets not even GET INTO the insurance nightmare of an unoccupied property.
You know you need to avoid big tax hits, but havent given any thought to making sure things are structured properly. Why the refusal to sit down with a tax pro? You have a fairly complex situation, and 2 properties worth in EXCESS of $1million - this cant be adequately handled by an internet forum.
have you ever considered that you might do much better by truthfully claiming one of both of these as investment properties....if you read the investment property thread in this forum, you would have learned of some of those benefits ($25k deduction off earned income, 1031 taxfree exchanges, etc)
I never said i claim 2 homes as my primary residence? Please show me where?
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 3:56a
Luniz97 said:
I never said i claim 2 homes as my primary residence? Please show me where? From your other thread (your April 26, 1:21pm post - Ive already quoted it in the other thread, so dont run to edit it now)
" the house i bought and am renting..i am showing as my primary residence.
the 2nd home i am building, there is a clause that says i can't rent or sell within the first year otherwise i will be penalized 50k. So what i am planning on doing is keeping one room to myself and renting the rest of the house which is perfectly legal and switch my primary residence to that house.
You already posted you are claiming the first house you bought as PRIMARY RESIENCE (which isnt true), and you plan to SWITCH your primary residence to claim this 2nd one as your primary residence by occupying a room...
Note that when posting here, OR speaking to a pro, you cant get accurate help when the story keeps changing! Also note I offered you some suggestions in your other post on some ways to proceed with your RE portfolio expansion...
I can't claim both of them as primary residences...i am not that stupid...they are 10 miles away from each other...nor can i claim it as a 2nd home. I already consulted someone about that.
didYOUsearch said: Luniz97 said: I do own 2 residences. One home is my rental property and claim as a investment and the 2nd is the new one that was built which is the one i probably will move in unless i can convince myself to sell it.QUIT LYING.
From your other thread " the house i bought and am renting..i am showing as my primary residence.
the 2nd home i am building, there is a clause that says i can't rent or sell within the first year otherwise i will be penalized 50k. So what i am planning on doing is keeping one room to myself and renting the rest of the house which is perfectly legal and switch my primary residence to that house.
You are NOT claiming the first house you bought and are renting as an investment property. Besides being foolish, you cant get accurate help when the ACTUAL facts are not posted!
why don't you read the sentence before...i said i am claiming the new house i bought as my primary residence.
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 4:04a
Luniz97 said: From your other thread " the house i bought and am renting..i am showing as my primary residence.
why don't you read the sentence before...i said i am claiming the new house i bought as my primary residence.
it says the house you already bought, and are already renting, is being shown as your primary residence. Thats what it says. Your 2nd paragraph then says you are considering "switching" your fake "primary residence" designation to the newly built home, and occupying a room.
Continually changing your story and playing these games, in this post, or to the IRS, will not work to your benefit. I think its hilarious, but the IRS is not going to think its that funny. And they will also see through your "story" just as quick as anyone here can.
It's kind of sad that someone like this with his connections and money isn't mature enough to handle the situation, and isn't mature enough to move out of his parent's god-dammed house. What a leech.
louedwards
Member
posted: Jun. 25, 2005 @ 5:27a
Luniz97 said: I bought a house preconstruction for 628k...it just got being done built june 1st. Its currently selling for 707k. The new models. I got an offer for 717k for my house. There is also a 50k penalty for selling or renting within the first year. If i take the offer we are going to do a lease to buy option where nothing comes out of my pocket for expenses. I also do not have to pay a broker, real estate agent because i am an liscense RE agent and the buyer is being represented by my aunt who is a broker and owns her own company. My payment on the house is approx 4500 per month 5.375 on 80% and 7.0% on 20%. I believe the place where this property is at will increase to atleast 825k by june 2006 and 750k by the end of this year. The 4.5k a month payment doesn't bother me at all and the home would remain empty till the one year mark and just used as a kind of weekend home. On one side i can sell it and make about 90k but be taxed at pretty much 50% or i can hold on to it till the one year mark is up or even 2 years so id on't have to pay tax. I am also claiming this as my primary residence. I also have another house that i rent out and live at home with my parents. The property is in the san francisco bay area. Any suggestions or comments on what i should do?
there are two common ways to legally dodge taxes:
1) don't sell it for one year; your taxes are less after one year
2) roll over your gains by changing the title to a REIT, then lease to buy option via the REIT, then reinvesting the gains into another property.
PS, a lease to buy option counts as "renting" for nearly all construction companies. if they find out, you're SOL.
you're welcome to PM with questions.
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 5:46a
also, LEGITIMATELY move in for 2 years to claim the $250k/pp cap gains exemption
also, claim the true character as an investment property, and 1031 exchanges into another property
also, creative use of trusts which could obscure transfers from the builder's sight
i'm surprised dYs is continuing to waste his time on this guy. he said "consult a pro" about 3 times already. the 1031 exchange idea came to mind when i read the first post. consulting with a pro is the better advice. OP should just say thanks and move on, sheesh!
didYOUsearch
Cranky Member
posted: Jun. 25, 2005 @ 7:14a
sc0rpio said: i'm surprised dYs is continuing to waste his time on this guy bc this and the other thread I linked on the 1st page are destined to be FW Finance Classics....
$4500x12=$54000 that you will pay mostly in interest for the first year of the 80/20 mortgage. Even if you get $90,000 more for the house, after taxes and the initial outlay of $54,000 I don't see much profit. Am I alone here, or am I missing somwething?
unknownshopper
Senior Member<br>6K
posted: Jun. 25, 2005 @ 9:14a
The thing that intrigues me most about these kinds of threads -- and the Staples blacklist threads for that matter -- is that this is a public forum ... and a fairly large public forum. FW has been mentioned in places like WSJ on several occasions. And if you do online searches, you'll see FW postings indexed there. So postings here are public information.
Member contact information is less public, but so far as I know not legally protected.
Tim runs this place to generate affiliate commission revenue. A LOT of revenue. It is the rare, rare FW finance thread that puts dollar 1 directly into his pocket. There is some value in having a couple hundred thousand people share their financial ideas, though. And FW Finance may be worth keeping for the added-value it provides to Hot deals posters. But don't forget for a minute that this is a business for Tim. And with the new building and expanded staff, a fairly decent sized business.
So I am amazed when members post potentially incriminating information about themselves or their financial deals and partners. Yes, most of the applicable government agencies have a lot of better things to do. But leaving a trail is never a good idea.
Do members really think that Tim would fight a valid subpeona to disclose member information regarding someone posting in FW finance? It's not like these threads are providing additional affiliate commissions like the HD posts do.
I'm surprised we haven't seen law enforcement trolls. Or maybe I'm just too dense to recognize them.
That's why people start off their thread with "This is for my friend who's dead but I'm just curious..."
fanman
Senior Member
posted: Jul. 6, 2005 @ 8:13a
unknownshopper said: The thing that intrigues me most about these kinds of threads -- and the Staples blacklist threads for that matter -- is that this is a public forum ... and a fairly large public forum. FW has been mentioned in places like WSJ on several occasions. And if you do online searches, you'll see FW postings indexed there. So postings here are public information.
Member contact information is less public, but so far as I know not legally protected.
Tim runs this place to generate affiliate commission revenue. A LOT of revenue. It is the rare, rare FW finance thread that puts dollar 1 directly into his pocket. There is some value in having a couple hundred thousand people share their financial ideas, though. And FW Finance may be worth keeping for the added-value it provides to Hot deals posters. But don't forget for a minute that this is a business for Tim. And with the new building and expanded staff, a fairly decent sized business.
So I am amazed when members post potentially incriminating information about themselves or their financial deals and partners. Yes, most of the applicable government agencies have a lot of better things to do. But leaving a trail is never a good idea.
Do members really think that Tim would fight a valid subpeona to disclose member information regarding someone posting in FW finance? It's not like these threads are providing additional affiliate commissions like the HD posts do.
I'm surprised we haven't seen law enforcement trolls. Or maybe I'm just too dense to recognize them.
Googler said: oelephant said: Luniz97 said: well its not really tax fraud because no one lives in it. So therefore its my primary residence.
I don't understand what is wrong with some of you people? I am looking for advice not your stupid retard comments.Your primary residence is the place you live. Claiming an empty house is your primary residence to save on taxes is tax fraud.It's not really "defrauding" anyone unless it's also being rented out.Ummm, no.
Factors used to determine main home. In addition to the amount of time you live in each home, other factors are relevant in determining which home is your main home. Those factors include the following.
Your place of employment.
The location of your family members' main home.
Your mailing address for bills and correspondence.
The address listed on your:
Federal and state tax returns,
Driver's license,
Car registration, and
Voter registration card.
The location of the banks you use.
The location of recreational clubs and religious organizations you are a member of.
didYOUsearch said: sc0rpio said: i'm surprised dYs is continuing to waste his time on this guy bc this and the other thread I linked on the 1st page are destined to be FW Finance Classics....
Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.
Members of our community may attach files to a post in accordance with the User Agreement. FatWallet is not responsible for the content, accuracy, completeness or validity of any information contained in any attached file. Files have *not* been scanned for viruses. Be especially wary of Excel files which may contain malicious content.
