Capital Gains And Short Sales

Comments(6)

• 
  DerrickAli5th January, 2005

  Matt:
  
  Nice to meet you!
  
  Interesting thing you mentioned xlosing through a Trust...
  
  Anyhow, How do you PLAN on taking the proceeds of the closings of these Short-sale transactions?
  
  Will they be funnelled into another investment or taken out until something else Hot comes along???
  
  After you have decided which of the above is BEST for you...then Talk about your objectives with a competent CPA or RE Atty.
  The Trust can shelter some or ALL of the tax consequences ...If Set Up & PLANNED PROPERLY.
  
  Example could be -
  
  a. Take control of Property via Trust, Trust Agrmt + POA + Deed into the Trust
  
  b. In Escrow be Sure you have the ability to Tranfser Title as a Remainder Agent or Trustee (Sometimes I act as Trustee)
  
  c. It would additionally be a SMART MOVE to ADD an LLC Corp or other Entity to the Trust (maybe even another Trust your own for long term holding purposes and Tax deferment)
  
  After meeting with your Tax/Legal Pro You should be well on your way to Capital Gains DEFERRED (Note NOT FREE) RE Investing future!
  
  Good Luck to You!
  
  Derrick Ali :-D[ Edited by DerrickAli on Date 01/05/2005 ]

• 
  JohnMichael5th January, 2005

  My account determines based on my income for a particular tax session if it will be claimed as earned income or capital gain.
  
  This year my accountant had me purchase several properties on contract for deed to offset my gain.
  
  Normally yes your name will be on title for a short period of time, if you are moving the property into a trust it can go in your name and you transfer over to the trust or you can have it titled into the trust name.
  [addsig]

• 
  matthewnorman5th January, 2005

  Thanks for the interesting comments!
  I'm still not sure that I am clear about the capital gains. Here is an example of the ideal scenario:
  
  1) Find the distressed home owner.
  2) Have the owner transfer property to a family trust
  (for estate planning purposes ) with me as the
  trustee.
  3) negotiate short sell and find a buyer.
  4) simultaneosly close using the buyer's money.
  5) title company writes me a check for the remainder
  of the proceeds.
  
  I have been told in the past by other investors that
  this type of closing, may in fact, keep me off of the title. Is this true?
  
  Also (the most important question) Am I, as an individual investor, responsible for capital gains in this transaction?
  
  Does this still hold to be true if a JP or LLC were named as trustee or had POA?
  
  I am basically looking for the most advantageous way of structuring this type of deal....tax-wise (all things considered) .
  
  Thanks for all your helpful insight! - Matt

• 
  DerrickAli6th January, 2005

  Matt:
  
  You asked:
  Quote:I have been told in the past by other investors that this type of closing, may in fact, keep me off of the title. Is this true?
  
  YES...If the Land Trust is PROPERLY STRUCTURED it is possible for your name to bypass pblic recordation on title...
  
  Also (the most important question) Am I, as an individual investor, responsible for capital gains in this transaction?
  
  AGAIN...ASK Your Accountant or CPA
  
  Does this still hold to be true if a JP or LLC were named as trustee or had POA?
  
  Most Likely NOT... but you have to get a professional's opinon on this regarding you personal financial circumtances and tax-positioning...
  
  I am basically looking for the most advantageous way of structuring this type of deal....tax-wise (all things considered) .
  
  Good now go visit with a Pro and Put A PERIOD at the END of Your QUESTION MARKS!!!
  
  
  
  Hope this Helped!
  
  (smile)
  
  derrick Ali :-D

• 
  NewKidinTown27th January, 2005

  matthewnorman,
  
  I am of the opinion that your strategy will be treated by the IRS as a dealer disposition. No capital gains taxes to worry about. Instead, your profits are taxed as ordinary income and are subject to self-employment income taxes as well.
  
  Make sure the tax professional who advises you is well aware of dealer dispositions in real estate.

• 
  matthewnorman7th January, 2005

  Thanks for all your insight. Keep up the great work everyone!!