Posted by leslie on February 17, 2002 at 10:58:33:
Good question. I can’t help but I would change the subject line, I thought this was about credit repair… I will say that I believe if you borrow from Sam, and I pay off Sam on your behaf, the debt relief is income to you.
Leslie
Repair Credits - Posted by John
Posted by John on February 16, 2002 at 11:42:16:
Do you have to pay taxes on repair credits?
Further, if you own a construction company and borrow $10,000 from that company as a downpayment or money needed to close a deal, and then that company gets $10,000 to perform repairs to the property after it has closed, does that company have to pay tax on that $10,000 or is it a net of $0 on the books? Consider that the company will never actually get the $10,000 back directly from me.
I know, good questions for accountants and real estate lawers, but I figure the investors on this forum might have some experience.
I guess it depends on whether a “loan” from a company is considered a disbursement. If it is than it is a nobrainer. If it isn’t, can a claim be made that the construction company was simply repaid the $10,000 through closing and that the work will be performed at no cost or is this considered laundering. It seems absurd to me that I put my own money into a deal and then my company receives that money back and then I have to pay some large chunk of it to taxes. Any way around this? I have done a couple of deals where I borrowed the money from the construction company and had the construction company paid through sellers proceeds for repairs to be done on the property. There has to be a way to not pay taxes on money that was originally yours but I don’t want any trouble with tax fraud.
Any thoughts?