SUB2 Taxes Invloved
Hello all. I have read about every post in here and I don't see anything on tax consequences of doing a sub2. I am not looking for legal advice just common sense answers like:
1) When I take over a house Sub2, when is the seller responsible for the sale of the house (assuming lived in less than 2 years). Is is when the deed transfers or when I cash him out when the new buyer refis? What about the cash I give them upfront for thier equity?
2) When selling if I sell on a CFD and the new buyers give me $10k down is that event a taxable event or do I just get taxed on my over all profit when the new buyer refis in the future.
If there is another post I can read about this could someone please point the way?
Thanks
Quote:1) When I take over a house Sub2, when is the seller responsible for the sale of the house (assuming lived in less than 2 years). Is is when the deed transfers or when I cash him out when the new buyer refis? What about the cash I give them upfront for thier equity?The sale occurs when the deed transfers. Any cash given for the seller's equity is included in their sale proceeds.
Quote:2) When selling if I sell on a CFD and the new buyers give me $10k down is that event a taxable event or do I just get taxed on my over all profit when the new buyer refis in the future?When you "sell on a CFD" you have a taxable event when you enter the contract. Any down payment received is included in the profit calculations that determine your tax liability.
Whether the transaction is treated as an installment sale or as a dealer disposition is a determination that needs to be made by your professional tax advisor.
DaveT
Thanks for your response. Just what I was looking for.