Posted by John (WA) on October 15, 1999 at 12:56:50:
Do they really want the cash back for repairs or is this a disguised way of getting around the fact that they do not have all the cash they need for a down payment + closing costs? This is what it sounds like. If they have all the down payment their particular lender requires, most lenders will not object with you throwing in funds for closing.
On the tax issue…if you agree to pay closing costs or give them a fixup allowance or whatever, all these would change your basis in the property accordingly. Ultimately, you only get taxed on your gain as determined by your adjusted basis.
CASH BACK FOR REPAIRS ?? - Posted by steph in tex
Posted by steph in tex on October 15, 1999 at 10:11:35:
i have a fixer ARV 85K (already appraised)
for sale and under contract as is 75K
only needs about 3-4K in cosmetic repairs
the buyer suggested 80K with 5K back for repairs
fine with me, but the loan officer says there are
restrictions as to how much i can give the buyer…??
i called the title company, they say i can give as much
cash back to the buyer as i want-AFTER CLOSING.
i don’t want to do that, as i will be taxed on
the money as though i rec’d it at closing.
they want the cash back so they can defer some
of the closing cost and not have to bring cash to the table.
this is clear as mud to me .
anyone that can explain the way repair allowances work, and the mechanics of it?
i told the lady i could just do the repairs, and sell it to her in repaired condition-but she wants to do major updating that i won’t stick my neck out to do before we close–i know how that could go!
calling all members of the peanut gallery! give me your .02!
steph in tex