$$ BACK AT CLOSE - Posted by Todd

import · January 10, 2003, 2:34pm

Posted by Todd on January 10, 2003 at 21:23:05:

The cash back at closing would not be income, when you sell the house though you would then need to show that your gain included this and you would therefore pay taxes on it. That is what I have been told anyhow.

import · January 10, 2003, 2:34pm

Posted by Todd on January 10, 2003 at 15:34:58:

I have a CPA who said that it is perfectly legal to set up a close whereby I state that the seller will give me $X amount back at cloe as an “incentive to buy” the house. Is this legal?

Thank YOu
Todd

import · January 10, 2003, 2:40pm

Re: $$ Your CPA is correct w/disclosure. (NT) - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on January 10, 2003 at 15:40:38:

import · January 10, 2003, 3:04pm

Re: $$ Your CPA is correct w/disclosure. (NT) - Posted by Todd

Posted by Todd on January 10, 2003 at 16:04:02:

When you say “with disclosure,” - Disclosure to who. The Title Company? That is not a problem. The mortgage broker? Who exactly do you legally need to disclose too??
Thanks

import · January 10, 2003, 5:03pm

Re: $$ Your CPA is correct w/disclosure. (NT) - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on January 10, 2003 at 18:03:57:

Buyer and seller, of course. This will be written into the purchase contract, and the lender. The lender also needs to know about the agreement. Some lenders have policies (not laws) that limit the percentage of the sale price that they can loan, so if the lender agrees there is no problem; and yes it is legal.

import · January 10, 2003, 6:11pm

Re: $$ Your CPA is correct w/disclosure. (NT) - Posted by Catherine

Posted by Catherine on January 10, 2003 at 19:11:08:

Is cash back at closing considered INCOME by IRS?

import · January 11, 2003, 11:43am

Re: $$ I would consider it - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on January 11, 2003 at 12:43:38:

as an adjustment to the basis in the property.

import · January 10, 2003, 8:25pm

Re: $$ Your CPA is correct w/disclosure. (NT) - Posted by Dick Chelten

Posted by Dick Chelten on January 10, 2003 at 21:25:23:

We are doing one right now where we are amending the PA to say that seller will provide buyer $7,500 out of seller proceeds at closing for repairs. This way, I get cash to do sme repairs with $$ left over to me, rather than reduce the price of the home and then the bank will only lend 80% of the reduced price. This way I get 80% of full price and 100% of “repairs” at closing.