Posted by dave on May 12, 2008 at 23:47:49:
Thanks John! These forums are priceless!
Seriously, just two LDs a year would pay tuition at BSU. Little did I know. Now I have loads of student loans to look forward to. Oh well, live and learn.
Do I need a CPA for Lonnie Deals? - Posted by Dave
Posted by Dave on May 12, 2008 at 09:19:58:
I’m really getting excited about a couple mobile homes for sale that I pass every day going to work. They have had little hand written signs posted in the windows for over three months and every time I talk to them they keep lowering the askng price. I think within a couple more weeks when lot rent is to be due again, they are going to part with them for the price I’m wishing to pay.
I’m wanting to aquire these and sell them Lonnie style where I finance and hold the note. My question is, am I going to need a CPA for this? I mean, if they give me $500 down, are those to be reported as capital gains? Then, how do I report the monthly payments? Help me out here guys!
Thanks!
Re: Do I need a CPA for Lonnie Deals? - Posted by Dr B.(OH)
Posted by Dr B.(OH) on May 12, 2008 at 19:51:13:
No you don’t. Don’t panic. You have until April 15th 2009 to fix any screwups during the year.
I don’t know your financial situation but after a deal or two, if you like the business, Buy Quickbooks and the KISS book:
http://www.realestatetaxlaw.com/products.php
Steve
Re: Do I need a CPA for Lonnie Deals? - Posted by Sherm
Posted by Sherm on May 12, 2008 at 13:58:24:
You will have to pay capital gains tax on the difference between what you have in the home and the selling price in the year the gain was realized. Suppose you have 3k in the deal and sell it for 10k with 500.00 down. You must pay the capital gains on 7k even though you have not collected the money.
Some others will be along to suggest a method championed by Ernest Tew. I believe it is some sort of lease option. The capital gains issue is the elephant in the room that rarely gets mentioned about Lonnie deals. Paying uncle Sam taxes on money you have’nt collected can really suck. But, that is just the way it is.
You might want to search the archives for Ernest Tew and see what his method is.
Re: Do I need a CPA for Lonnie Deals? - Posted by Lin (NC)
Posted by Lin (NC) on May 12, 2008 at 11:30:29:
Hey Dave,
Glad you’re excited about the opportunities you see in front of you.
Give us some more information about where you’re at, and someone who’s doing deals in your area can respond and give you locale-specific advice. For example, you may want to do a lease with option instead of a note in some states.
To answer your original question, you almost certainly won’t need a CPA, and don’t let the accounting aspects of these deals get you bogged down here. Talk to those sellers and find out their stories right away. That gets your foot in the door. We can help you more from there when we have more information on the area and the homes themselves.
Good luck!
Lin
Re: Do I need a CPA for Lonnie Deals? - Posted by dave
Posted by dave on May 12, 2008 at 14:24:38:
Thanks guys!
I know nothing about proper book keeping and tax strategies so if I do not hire a CPA now, will I be in a world of hurt come tax season? I’m probably scaring myself out of acting upon these deals, and I absolutely need for this not to happen as it has in the past. I’m a noobie and I feel like I just need to get that first deal under my belt to shave some of the anxiety off.
I’m living in Boise, ID right now and it would be great to talk to somebody in the area doing deals. Thanks again for your help!
Re: Do I need a CPA for Lonnie Deals? - Posted by John (WA)
Posted by John (WA) on May 12, 2008 at 22:11:41:
Dave, I know Ed does deals in Idaho, not in Boise, and hopefully he will see your post and contact you. I have his email but I am not sure if he would want it just posted so I will send him an email with a link to your post. I know there are a lot of mobiles in Boise my son is there playing baseball and I tried to get him to do some deals for me while he was there but I guess he thinks college is more valuable than Lonnie deals, little does he know!!!