Posted by sam on February 06, 2003 at 17:35:10:
Thanks for your responses. In this township approval would take about a year, assuming no variances, or state dep approvals needed. Next town over same approval would take you 2-3 years.
Residential land/lots - Posted by Sami
Posted by Sami on February 05, 2003 at 18:29:14:
I’m a builder in New Jersey (booming market, for now).
I need some creative minds. I recently met with a land owner who owns 26 acres, 21 of which is farmed and farmed assessed and a separate deed of 5 acres which includes her home.
She’s 82 years of age, sharp as a tack, and has 2 daughters that also joined us at her meeting.
She’s interested in selling the 21 acres (5 lots) and is pleased with my offer from a $$ stand point however here is their concern.
They feel if they sell the 21 acres now not only will they get wacked with capital gains tax but Mom passes away it will affect or show how vaulable her house and the 5 acres is worth and they will get hit hard with inheritence tax.
I really don’t follow “their logic” but it’s “their logic” and I have to have an answer and a solution for them to move ahead.
Here is my thought, when their Mom passes away it’s going to be appraised as of her Date of passing and whatever the inheritence tax is on that vaule will be applied.
My thought was this and it may scare them off because it involves her home to-----------
How about I buy “both” parcels including her home and then give her a life estate for her home and the 5 acres.
Would that not be a simple sale of her primary house therby excemping 250k (she’s a widow)and being taxed @ 20% on the remaining be cheaper then paying inheritence tax. ???
Todays value on the 21 acres (5 lots) is about 600k her home and the 5 acres probably worth 400k.
Does my suggestion make sense (?) (any accountants out there)
Any one have any better suggestions?
Thanks in advance.
Federal Inheritance tax doesn’t kick in until - Posted by David Krulac
Posted by David Krulac on February 06, 2003 at 17:09:24:
$1million, so if the estate is worth $1million or less there is NO federal tax. And the steppped up basis would eliminate capital gains tax if they sold shortly after the demise of the mother.
around here a subdivision plan would take 1-2 years for approval maybe more. Is 5 lots the best you can do? More lots generally means more money. One way to forstall the tax man would be for your contract to be contiquent upon subdivision approval and have the owners subordinate the the land price until the house is built AND sold.
David Krulac
Central Pennsylvania
Re: Residential land/lots - Posted by GMann
Posted by GMann on February 06, 2003 at 13:58:34:
How about letting them finance a portion or all of the deal. That way they will not get hit so hard with capital gains right off the bat.
Let the seller do the mortgage in a Trust’s name.