Real Property Vs Personal Property In Purchase Agreement
My accountant says it is best to break out the real property from the personal property when purchasing rental units. He says that such things as furniture, appliances, lawn equipment, curtains, etc. should be listed separately for tax reasons.
I was hoping someone would comment on how they handle this. Does anyone have a copy of a purchase agreement that lists the personal property separate from the real property?
Foggy :-o
I've never played this game in a real estate transaction though I have structured a couple of business purchases where this was important. The issue of course is that personal property can be depreciated much more rapidly. The trick is that personal property is usually such a small portion of the real estate deal that it doesn't matter that much.
In Illinois the standard Chicago Association of Realtors contract contains a paragraph to spell out what personal property is included in the transaction. All you have to to is allocate a portion of the value to that part of the transaction.
Yes ... in handling commercial business on selling mobile home & RV parks my escrow officer does breakdown any personal property on park-owned units out of the purchase price.
The main reason for this breakdown is to separate the personal property from the real property is to save on the title policy costs.
The purchase contracts we use in California does have a clause for personal property to be included and excluded. You can also use an "Addendum" to your purchase contract ... especially helpful if you have quite a number of items to list and describe.
Cheryl Lopez