Background:
I have older friend offer to sell me their home which they allowed family to live in. I believe my friend still claim as primary residence. In its condition the bank would not have loaned money for purchase so we wrote up a purchase agreement and I invested my HELOC ($60k) into renovations for much needed repairs and upgrades. It’s taken every penny in materials and labor.
We are a few weeks from finishing and putting on market. I completely trust my friend and have the agreement to also protect my investment. So I had planned to close on property at the table with new buyer, then paying my friend immediately. If all goes as realtor suggests, I’m subject to clear about $175k, after repaying my personal expenses, the HELOC I can imagine clearing $100K AND keeping 2 of the 5 acres for future project.
Delima:
My closing company suggested that I let current owner-on-record (my friend) sell it, and invoice them the amount over original purchase agreement. What is the tax implications either way?? I don’t want them to absorb any increased capital gains tax and I want to reduce mine as much as possible. Do I close and then sell, do I let then sell and I invoice them?
Final question… LLC or S Corp? I don’t know when I’ll get my next investment property but I’ve been bit by the bug but don’t expect such routine large return. My parents came from modest means and didn’t buy their home until they were older so anything I can do to create generational (protected) wealth for my twin adult daughters would be ideal.
Since I got involved in this project I began listening to your YouTube channel while driving to and fro to the property, a 2 1/2 hr drive every weekend (Friday evening & Sunday afternoon) and I’ve learned a lot and know that I don’t know even more. Trifecta? Trust? SCorp, LLC?? Hiring my grandkids??
Thank you,
B Carpenter (Yep, real name)
I got a lot going on and called the office but been playing phone tag.