Hello Papa! When buying with terms with a transfer of DEED (Buy Subject To), what’s the least time do we need to hold the property for, before we transfer the deed to our new buyer, but without paying taxes ? I’ve heard if sold in less than a year (12 months), we will have to pay capital gain. So should we keep it at least for 13 months? Thanks!
You’ll pay capital gains regardless of when you sell it but if within a year will be short term capital gains at your tax bracket, after a year it will be long-term app 15 or 20% depending on your other earnings. Doesn’t matter how do you buy it for this to apply. You can 1031 exchange and avoid the taxes.
Papa, I’m working on a deal (Buying subject to). The seller has owned the house for several years. She asked me since the deed will be transferred to my LLC, when and how should she report it on her taxes? I told her since she has owned it for a long time, she won’t have to. Also, since the deed is been transferred to my LLC, we will be the one to report taxes. Was I right? The term is for 5 years…
You should not be giving tax advice at all and if this was not her residence you were totally wrong. If she did not live in the house she will be taxed on her gain on long-term capital gains. If she lived in it, she won’t. You should be taking title in a land trust, not an LLC.
Papa, I have a second deal I’m working on. It’s a SFH with 4 beds (plus an extra room that can be a 5th bedroom). and land is 1.8 acres. Seller is considering terms with a balloon. He is okay with a 5 years. The comps in that area is in at least 1 million. And there is a golf club in the less than 0.5 mile from the property. It’s in Pennsylvania. I’d like to get into partnership with you on this deal. Part of my earnings will HELP me pay for my Mentor.
I partner with students who have been through Quick Start school and are currently in the mentoring program. If that is you, see your mentor. If not, you can get in the mentoring program and sign up for Quick Start but will not get active with a mentor until maximum 30 days from the event.