Has Anyone Used This Method?
Hello, All
I believe this question needs to be addressed from both an accounting and legal standpoint.
The other day I read, I think in one of Cook's books, that one method that can be used for, "no money down investing", is to find a partner and present them with this offer ... If they'll partner with you, put forth the cash/credit necessary for the acquisition of a property, allow you to keep the monthly cash flow from said property, and split the sale proceeds 50/50, You will manage all aspects of the property and give them the full depreciation write-off.
When I mentioned this method to an accountant, they laughed and said, "It sounds to me like you're selling tax write-offs. I doubt that this method is permissable by the IRS or legal for that matter. If you're a 50/50 partner with regards to the purchase *and* sale of the property, I should think you'd have to be a 50/50 partner in it's depreciation."
Obviously, my first question, is the accountant right or wrong? My second question, if Cook's method is allowable, could I, as a further enticement to the would-be money partner, offer to pay a portion of or even the entire amount of their Cap. Gains tax?
Thank you in advance for any and all assistance.
RJ
I have done it in the past with no problems, but I either make it a truly 50/50 split with everything or just make them money off the cash back I make on the property and the rest is mine. Everything and anything can be negotiated through side contracts. I am proof positive of that. Your best bet would be to contact a real estate lawyer with some experience, or an accountant that has investor experience.
I have been laughed at, told I was illegal, and even worse until I talked to the right people that knew the industry. Asking a general accountant this question would be like asking a bum off the street how Trump made his millions. Both will come up with an excuse rather than a legitamit detailed answer.
Good Luck,
Kyle
Hi, Kyle
Thank you for your response. I've yet to receive an affirmative on the split as I've presented it from the CPAs, but I haven't given up hope. <g> Thanks again for your reply.
RJ
Hello RJWILLIAMS,
First let me say something that may investors often forget. being an accountant or lawyer per say doesn't always mean they know what's best for you as an investor. IRS code is rather large and no one can really be the specialist in all aspect of the low. The same goes for attorneys as well so what you have to do is find both how do invest creatively themselves. Then you'll have the better chance of getting the right answer. By the way, I believe theater you would be better off posting this question in Legal Forum. In general, I agree with Kyle.
Good luck!