Holding Title On An Owner Financed Property
Hello All,
I'm looking at purchasing a property in my area from an elderly gentleman that is liquidating his current holdings. He's willing to owner finance the property with the note due in five years. He wants to keep title in his trust to alleviate some of the taxes (which I'm okay with since my yearly tax bill would be around $10,000) and for capital gains purposes.
My question is, what is the best way for me to hold title to the property while he's owner financing that will 1) Not trigger a huge property tax increase for me due to the huge sale price 2) Alleviate capital gains for the five years that he's owner financing and 3) make sure that if he passes away, I don't lose the house because it wasn't recorded right?
He would like to keep the house in his trust rather than creating a new one. Should I just be placed on HIS trust for the specific property as the executor with recorded documents saying that I am the legal owner of the property, or could we do a land contract?
I should know the answers to this but I'm baffled at how to go about this one!
Your input is appreciated!
Please help us out a little as you have posted this already at TCI located at http://www.thecreativeinvestor.com/ViewTopic35127-12.html
TCI prefers that you post your questions once and not multiple times, as it will confuse the learning process.
Thanks.
[addsig]
Stella:
Nice to meet you!
You stated: Quote:"About my post, what would be the consequences if I were to keep the property in his trust with me as the beneficiary and trustee on the property with a clause stating the terms of the sale on a separate contact?
Stella: Do Be Careful of not triggering the DOS with the contract or have the IRS deem the Trust as a Disguised Installment sale transaction that's IMMEDIATELY TAXABLE.
For the most pat Trusts are Private and Anonymous to the public. But for IRS purposes they remain Transparent.
You should probably write an option agreement vs. a Sale Contract until such time as you are able to take 100% ownership of title by paying off the Trust (seller) completely as agreed to up front.
You also stated:
Quote:What I'm trying to accomplish
1) Keep my property taxes at a lower rate by maintaining the existing property value
Smart just make certain you properly structure WHAT BENEFITS you want from the Trust Beneficiary Agreement and also make sure that at least 10% Beneficial Interest in the Trust REMAINS with the future Seller(Settlor Owner) so that the property taxes are not re-calculated by the local authorities.
Quote:2) Keep the property out of my name for a short period of time while I finish out some legal problems"
SMART MOVE - so long as you are not deposed about interest you hold within Trusts
Stella I hope this helps!
Happy Investing!
Derrick Ali :-D