Purchase With Cash Out At Closing
Hi all,
I am purchasing a property from which I will net around 15k. My wholesaler who is getting me the deal has mentioned 2 ways to take the cash out. The first option is to take the cash at the table at closing. She also is open to the option of adding the 15k to her fee and having a side deal where she then transfers it to me. Are there any tax implications form going one way or the other?
You get cash back at closing by either financing for more than you are paying, or having a seller concession in your contract.
In the first instance, your taxable profit is the difference between your purchase price and your sale price. The cash back from overfinancing is a tax free loan that must be repaid.
In the second instance, the contract price is higher but the seller gives you a rebate or concession. Your cost basis in the property is the contract price minus the concession.