Question about buying or selling a house or property... - PeachParts Mercedes-Benz Forum

KarTek · #1 08-17-2009, 10:25 AM

Quote:

Originally Posted by davestlouis

I would also imagine that there would be some sort of federal notification about such a large cash transaction...it you walk into your bank with $100K in 100 dollar bills, surely the bank has to tell somebody about that.

Yes, that's something I'm curious about too.

Now, here's another question:

Hypothetically, if I have a friend who's down on his luck and I want to sell him a piece of property at a discount for him to build a house on, am I under any obligation legally to sell that property to him at a "fair" market value or can I sell it at what ever price I choose?

What if that friend is a building contractor and I want to trade him the property for the equivalent value in construction services?

I'm just thinking out loud here.

Jim B. · #2 08-17-2009, 10:37 AM

Quote:

Originally Posted by KarTek

Now, here's another question:

Hypothetically, if I have a friend who's down on his luck and I want to sell him a piece of property at a discount for him to build a house on, am I under any obligation legally to sell that property to him at a "fair" market value or can I sell it at what ever price I choose?

You can give it to him for free, by deed, sell it to him for any price and keep a mortgage on it for him to pay you back, or trade it for something in exchange for the deed.

You can transfer it for a dollar, full market value or anything in between. It is up to you.

Quote:

What if that friend is a building contractor and I want to trade him the property for the equivalent value in construction services?

I'm just thinking out loud here.

THAT is a trap for the unwary. I would never get into ANY deal with a down on his luck building contractor even if he is a REALLY good one.

Most have no money, and ask for "progress payments" to pay them as they go, when they build things. Many times they don't pay their subcontractors, who then have the legal right to record a lien on YOUR house, which you have to pay off when the contractor skips town or runs out of money.

Trade HIM (the contractor) the real estate for "the equivalent value in construction services"?

Oh no, never. Unless you TOTALLY trusted them, and even then, NOT till they performed the equivalent value in services FIRST.

And even THEN, probably a very bad idea. Get a VERY good written contract, with strict timelines for completion, and penalties for every day late.

Contractors are notorious fo working on their OWN schedules, and showing up when they feel like it.

Check their licenses are in good standing, the have all the bonds they need so if a worker gets hurt on the job you aren't stuck with it, get their references for past work, and then CALL them.

If you trust, then VERIFY...

ramonajim · #3 08-17-2009, 10:38 AM

If you sell a property at less than market value, you're supposed to report it on your income taxes - you may be liable for gift taxes on the difference between your sale price and fair market.

dynalow · #4 08-17-2009, 09:57 PM

Quote:

Originally Posted by ramonajim

If you sell a property at less than market value, you're supposed to report it on your income taxes - you may be liable for gift taxes on the difference between your sale price and fair market.

No and yes.

No: It's not an income tax item (for either you or the buyer.)

Yes, there is a gift of the difference between the FMV and what he pays you. This would likely require you to flle a gift tax return (Form 709).
Assume the lot is worth 50. You sell it to him for 30. You have made him a gift of 20. The annual exclusion for gifts is 13 (13,000 actually) Your net gift is 7. You have a 1 million dollar lifetime gift tax "exclusion." No tax currently due and your remaining lifetime exclusion is 993,000. Rules are better if you make a joint gift with your spouse.

Hatterasguy · #5 08-17-2009, 06:50 PM

Quote:

Originally Posted by KarTek

Yes, that's something I'm curious about too.

Now, here's another question:

Hypothetically, if I have a friend who's down on his luck and I want to sell him a piece of property at a discount for him to build a house on, am I under any obligation legally to sell that property to him at a "fair" market value or can I sell it at what ever price I choose?

What if that friend is a building contractor and I want to trade him the property for the equivalent value in construction services?

I'm just thinking out loud here.

I have never done a trade before, so I can't help you with that.

But as for your first point no, as long as you are not a licensed real estate agent. If you have your license even if you are not practicing be carefull. If you steal some property from someone you can get sued. Thats why I let mine expire. On the flip side with selling, as long as you are the owner you are fine.

But no you are under no obligation to sell or inform the buyer of the fair market value of the property. I make a lot of my money by purchasing stuff far, far below fair market value. For example the last building lot I purchased I got for 30% of FMV. I'm working on one now thats complicated and is currantly worthless, but after some work I'll have about 50% of FMV into it, after I make it valuable. My uncle has been known to literaly steal them for about 5% or less of FMV.

You can sell the property to your friend for $1 and it has been done before.