trusts...can this hide the purchase price? - Posted by chris

Posted by Lee Allen on September 11, 2009 at 21:50:30:

I put a property into a land trust about 3 years ago. I did a lease-purchase about 2 years ago to a tenant/buyer and she is about ready to get her permenant financing.

I have asked several mortgage brokers if the $7000 that she gave me for the option could be used as her downpayment and I was told no that it could only be used to pay for some of her closing costs. I was told that she will have to come up with another $5000 to put down as her downpayment. This isn’t a possibility for her.

Is there a way that I could make her 10% beneficary of the trust and then a lender would allow her to refinance?

trusts…can this hide the purchase price? - Posted by chris

Posted by chris on August 28, 2009 at 20:51:00:

I am concerned about the tax assessment office in the area that allows individuals to look up purchase prices of houses. Can a trust hide the purchase amount, because we could transfer the ownership within the trust?
Also how much more should setting up a trust cost than a typical atty fee for closing?

In Florida yes - Posted by thutch fl

Posted by thutch fl on September 01, 2009 at 16:43:58:

If you use a land trust and direct your title agent or lawyer to send the doc stamps to Tallahassee, then the local property appraiser will not know the price. They reverse engineer the price from the doc stamps recorded.
It will show up as a $100 sale.

Re: trusts…can this hide the purchase price? - Posted by BTI

Posted by BTI on August 30, 2009 at 12:59:09:


You don’t give a location, so that will determine a lot of your possibilities. In some states your out of luck. I’m assuming your reason is you want to hide what you paid from future buyers.

In California many of the scam artists of the day used to pay for extra tax stamps and give the impression they paid more, and the average person wanting to know wouldn’t proceed past the tax stamps.

However if the supplement tax bill has been issued it’s a simple matter to figure out the sales price, just get out the calculator.

I haven’t invested in a state yet where I couldn’t figure that out but why, what you paid has nothing to do with the price I’m willing to pay.

As thing get tighter you might see tax collectors looking for changes in ownership in entities to update the taxes. It can happen, I remember a corp in San Diego being reassessed due to enough changes in their ownership files when I lived there for awhile. Hm-mm, that raises a question, could a tax collector reassess based on a change of trustee, seeing as the trustee technically is the owner of record and the assessment is based upon the date ownership changed, I guess I have to look into that but I don’t want to give the tax man any possible ideas.


Re: trusts…can this hide the purchase price? - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on August 28, 2009 at 22:57:54:

In CA, we record a deed with notation “Transfer Tax not public information” or similar language, then attach a separate document which breaks down the transfer tax for the assessor.

This latter document is not recorded. I’ve never had a problem concealing this information and keeping it private, however at least one poster on this forum has stated in the past the fact of the amount of taxes paid is NOT private and can be circumvented.

Another way is to transfer to THT for $-0-, then sell beneficial interest, which does not record or especially inform the assessor that there was a taxable event.

You might try reverse engineering a few deals for which the transfer taxes (and hence the purchase price which is calculated from this) are obscured to the public.

Maybe Ms. “K” will chime in here?

It’s certainly worth a try.

Re: trusts…can this hide the purchase price? - Posted by Dave T

Posted by Dave T on August 28, 2009 at 22:22:24:

The purchase price is available to all the realtors who run comps. Hiding the purchase price seems to be an effort in futility.

Re: trusts…can this hide the purchase price? - Posted by Kristine-CA

Posted by Kristine-CA on August 28, 2009 at 23:19:27:

Transfer tax in CA IS public information. You can record the doc
without the transfer tax noted on the face of the deed, but it doesn’t
change the fact that it is public. I’m one of the people that goes the
recorder’s office with my list of props to look up the transfer tax, so as
to ascertain sale price. You have to go up to the clerk and they keep
the info by date in a binder…behind the counter. Some data service
providers are going as far as manually getting that info, so I’d say the
idea that selling price isn’t public is on it’s way out, at least in CA.

As for the question at hand: Deeding to a trust for 0 or as a gift is
good. Then selling the beneficial interest is great, but how does that
work in terms of the buyer eventually becoming owner of record.
Owning interest in a trust eventually needs to become a deed if
someone wants to finance and/or resell. I like this idea, so please let
me know your thoughts on how to make this work and avoid disclosure
of sale price. Thanks! Kristine

Re: trusts…can this hide the purchase price? - Posted by Edwin

Posted by Edwin on August 30, 2009 at 01:07:46:

Why are you so worried about hiding the purchase price? You’d be better off hiding the fact there was a transfer in the first place.

Re: trusts…can this hide the purchase price? - Posted by Edwin

Posted by Edwin on August 30, 2009 at 01:06:27:

Kristine, it is usually not a problem to temporarily deed a property out of a trust long enough to get financing, and then deed it back into the trust. And you don’t have to deed it to the buyer’s name when you resell. Actually, if it’s in California,and the property had appreciated significantly, that would be an expensive added burden for the buyer. I say keep the property in the trust as long as possible. Simply sell the beneficial interests. The more you can do to avoid a tax reasessment, the better.

Re: trusts…can this hide the purchase price? - Posted by Bill H

Posted by Bill H on August 29, 2009 at 10:33:48:

In a trust, the trust always owns the proprty.

The beneficiary owns the beneficial interest.

The trust can sell, trade, encumber, etc…AT…the direction of the beneficiary who has the Power to Direct.

The beneficiary executes all the NON-Recordable documents, such as loan apps, loan docs, financial data, notes, etc.

Trustee executes for the trust all docs that are recordable.