Taxs On Gain From A Property Bought From Another
Bought a property for 115k, seller net 93k after 6% roll in leaves 22k back to me from seller behind doors.Wanted to know if i had to pay taxs on the 22k . did pay sellers taxs gains.
also didnt want to deposit in bank yet.
raybz5
The $22K received from the seller is a refund or a rebate of your purchase price. As such it is an adjustment to basis, so your cost basis becomes $93K ($115k minus $22K).
When you sell the property in a non-deferred transaciton, the $22K becomes part of your taxable capital gain.
I disagree with the ordinary income tax treatment. However, if a lender was involved in the financing, and your side agreement was not disclosed to the lender, the lender may have a loan fraud case against you.
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