Ok....Now I dislike Bank of America too

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Ok....Now I dislike Bank of America too

Jon Rood
Excavation Contractor · Livingston, TX · Member since 2009 · 42 posts · 6 votes

My realtor calls me today on 3 bd. 2 ba. brick repo in my home town for 30k. Market rent would be around 800.00. I was excited and dropped what I was doing to go look at the property, and it was great deal for my area. I make a full offer for the listing price and we get an email back stating the property was no longer available. Here is the good part....Bank of America donated it Habitat for Humanity. First let me say I have no problem with Habitat. My main business is construction and I have donated the sitework on all the builds in our town. What I like about Habitat is the owner has to WORK and make affordable payments = GREAT PROGRAM. How do we compete with a Government Owned Bank that is now giving away houses? Has anyone else heard of this? Why would they do that instead of selling and taking loss?

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Eric M.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
14y

Boy, if donating to a worthy cause makes you dislike a company, what does one have to do to make you like them?

Maybe your judgement criteria is a bit skewed and you could rethink things in a more rational way?

Originally posted by Jon Rood:
My realtor calls me today on 3 bd. 2 ba. brick repo in my home town for 30k. Market rent would be around 800.00. I was excited and dropped what I was doing to go look at the property, and it was great deal for my area. I make a full offer for the listing price and we get an email back stating the property was no longer available. Here is the good part....Bank of America donated it Habitat for Humanity. First let me say I have no problem with Habitat. My main business is construction and I have donated the sitework on all the builds in our town. What I like about Habitat is the owner has to WORK and make affordable payments = GREAT PROGRAM. How do we compete with a Government Owned Bank that is now giving away houses? Has anyone else heard of this? Why would they do that instead of selling and taking loss?
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  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 819 posts · 427 votes
    14y

    I may be wrong here, but perhaps Buffet & company write the donation off at it's "market" value of $100,000 and the administration throws in some other tax breaks to them as well?

    0Reply
  • Jon Rood
    OP
    Excavation Contractor · Livingston, TX · Member since 2009 · 42 posts · 6 votes
    14y

    i thought the same thing, but cant they also write off the loss?

    0Reply
  • Sam Sagor
    Residential Landlord · Kailua-Kona, HI · Member since 2012 · 111 posts · 15 votes
    14y

    It looks better. "They give to habitat for humanity" they can't say that if they sell it. They can now have an advertising campaign about BOA helping less fortunate in these hard times. If this is not an isolated event it could be for the PR purposes and you'll be seeing it posted, laminated and printed all over BOA branches.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Jon Rood:
    How do we compete with a Government Owned Bank that is now giving away houses?

    Unless my definition of "government owned" is different than most people's, I'm fairly positive that BoA is *not* government owned...

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  • Jon Rood
    OP
    Excavation Contractor · Livingston, TX · Member since 2009 · 42 posts · 6 votes
    14y

    how about gov. subsidized?

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Jon Rood:
    how about gov. subsidized?

    Not quite sure how they are subsidized? When has the government granted them money?

    The government *loaned* them $45B in TARP money, and BoA repaid the whole thing, with interest. That's certainly not a subsidy.

    How exactly is the government subsidizing them?

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    I consider it a subsidy because of what the banks did with the money.

    It's the governments fault for not making restrictions on it and merely offering SUGGESTIONS on how it should be used. Of course the banks used it for their own financial gain instead of lending it out like was suggested to them.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Joel Owens:
    I consider it a subsidy because of what the banks did with the money.

    I think you just made my point for me. Had the money been for a specific purpose (and had it not needed to be repaid with interest), it may have been considered a subsidy.

    But the fact that there were few restrictions and repayment with interest was expected, it was clearly a loan, and not a subsidy.

    Btw, as someone who owes taxes every April 15, the government loans me money as well every year.

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  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    14y

    Boy, if donating to a worthy cause makes you dislike a company, what does one have to do to make you like them?

    Maybe your judgement criteria is a bit skewed and you could rethink things in a more rational way?

    Originally posted by Jon Rood:
    My realtor calls me today on 3 bd. 2 ba. brick repo in my home town for 30k. Market rent would be around 800.00. I was excited and dropped what I was doing to go look at the property, and it was great deal for my area. I make a full offer for the listing price and we get an email back stating the property was no longer available. Here is the good part....Bank of America donated it Habitat for Humanity. First let me say I have no problem with Habitat. My main business is construction and I have donated the sitework on all the builds in our town. What I like about Habitat is the owner has to WORK and make affordable payments = GREAT PROGRAM. How do we compete with a Government Owned Bank that is now giving away houses? Has anyone else heard of this? Why would they do that instead of selling and taking loss?
    2Reply
  • Jon Rood
    OP
    Excavation Contractor · Livingston, TX · Member since 2009 · 42 posts · 6 votes
    14y

    Eric,
    If you would read my post, you would see I fully support the Habitat program. The reason I support it is because it is a "hand up, not a hand out" program. Maybe, I should do alittle research on how they wil handle a house we are not building. If they still make them work (i.e. paint,clean, ect.) and pay and affordable mortgage, then I take back my negative comments. I guess my real problem is a gov. that loans money (they printed and devalued mine) to private entity and does not use said money to help people, but instead found another ave. to profit off tax payers. Yes, I know they paid the money back, but if I run my business poorly, do you think they will give me a loan......nope.....what I do get to do is pay an effective tax rate of about 50%-60%. But, Thanks...because of you I will contact the man that runs our local Habitat program and see how they are going to handle it.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Jon Rood:
    ...if I run my business poorly, do you think they will give me a loan......nope.....what I do get to do is pay an effective tax rate of about 50%-60%.

    Wait...you can run your business poorly and you'd still pay an effective tax rate of 50-60%??? Sorry, I don't believe you -- I'd bet that you're either making up numbers or don't understand how your business is taxed.

    The average effective tax rates for small businesses in this country is about 20%, and the larger the business, generally speaking, the lower the effective tax rate. I'd venture to guess that there aren't any standard businesses paying an effective tax rate of 60% given our current tax laws.

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  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    14y

    Businesses don't pay taxes J...the consumers of their products or services do. So I would make the claim that all businesses pay zero tax.

    1Reply
  • Jon Rood
    OP
    Excavation Contractor · Livingston, TX · Member since 2009 · 42 posts · 6 votes
    14y

    This is after maxing out sec. 179 and bonus depreciation.
    New equipment 8.25% sales tax, 1% heavy use tax. 2% excessive diesel use tax.
    My equipment fleet worth 2.5mm taxed at 3% year.
    Heavy use tax on each truck $4,000.00
    Property taxes 3% and on and on
    I constantly read this forum and many others to learn as I only have a 10th grade education. I hear how people have figured out how to invest and they dont pay tax. I have a full time CPA in my office as well as a well paid firm who oversees him. They have yet to come up with a way to make alot of money and not pay the taxes stated above. I know I am blessed and I should be thankful for what I have....I am, but, I will NEVER be excited about the gov. using my above said money to be involved in private enterprise. So to be fair with everyone who has posted on this thread, I was just alittle upset about the house because I saw it as another hand out. I should have researched the Habitat method for placing the house, and I really just wanted to know if anyone else had run into this same situation?

    J. Scott...I have read many of your post's and I really respect your knowledge, but I do not make up numbers, If you make and try to save a big profit in this country, you will taxed to pay for politicians and dead beats. sorry if I offened you or anyone else. You can check my numbers. they are actual not proforma (lol)

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  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    14y

    My point was that your numbers are adjusted to account for the taxes Jon. If you paid no taxes then all prices would be lower. Pricing for your products and services is adjusted to account for the tax whether or not it is done intentionally.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Jon Rood:
    ...I do not make up numbers...

    So, your U.S. based business *actually* paid more than 50% effective tax (by the true accounting definition of "effective tax")???

    If so, I highly, highly recommend that you look into finding a new tax professional who should be able to help you restructure your business in a way that can save you a lot of money.

    And personally, if I had a good tax professional assure me that my business had no way around paying more than 50% effective tax rate, I'd likely close the business and start a different one.

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  • Rose Morris
    Real Estate Investor · Columbus, OH · Member since 2010 · 21 posts · 3 votes
    14y

    I have been reading all the comments to Jon's raving of paying taxes. Almost everyone here is RE Investors, which we can get a lot of tax brakes and save us a lot of money. It looks like Jon has a lot of trucks. Many years I have used my tax breaks in RE to help cover all the taxing that is done on trucking. I don't think anyone that is not in trucking has any idea how much taxes the trucking industry pays. They even charge us highway use tax that goes to build airports. And now with the fuel going up, I don't know how anyone makes a penny in trucking right now. Although trucking affects just about everything in the economy, they are one of the highest taxed groups in the US.

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  • Rose Morris
    Real Estate Investor · Columbus, OH · Member since 2010 · 21 posts · 3 votes
    14y

    Someone made the comment that if you can't get the taxes lowered you should get out of the business. I have finally done that after 20+ yrs but where would we be if every trucking company decided to get out of the business? Trucking can bring the US to it's knees in 2 days time and yet they tax us to the hilt!

    0Reply
  • Jon Rood
    OP
    Excavation Contractor · Livingston, TX · Member since 2009 · 42 posts · 6 votes
    14y

    Rose...I totally agree with you, and appreciate your input. It seems others have a different view about business and tax than I do. Maybe, they are like Warren Buffett and want to pay more, who knows. congrats on your new business. BTW what type of trucking did you do?

    0Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    14y
    Originally posted by Bryan Hancock:
    Businesses don't pay taxes J...the consumers of their products or services do. So I would make the claim that all businesses pay zero tax.

    My business pays tax and I have no product or service or customers. I generate profits on my own trading stocks, futures and real estate.

    0Reply
  • Eric M.
    Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
    14y

    Jon, I did read your post and I know you support Habitat. This was not my point. My point was from your title. You say you now dislike BofA. It seems you simply dislike them for donating a property to a charity you support. Seems an f'ed up reason to dislike a bank.

    You really dislike them for taking a potential deal from you. But big deal, many potential deals are lost for numerous reasons every day. Move on and don't be childish about disliking things for silly reasons.

    Originally posted by Jon Rood:
    Eric,
    If you would read my post, you would see I fully support the Habitat program. The reason I support it is because it is a "hand up, not a hand out" program. Maybe, I should do alittle research on how they wil handle a house we are not building. If they still make them work (i.e. paint,clean, ect.) and pay and affordable mortgage, then I take back my negative comments. I guess my real problem is a gov. that loans money (they printed and devalued mine) to private entity and does not use said money to help people, but instead found another ave. to profit off tax payers. Yes, I know they paid the money back, but if I run my business poorly, do you think they will give me a loan......nope.....what I do get to do is pay an effective tax rate of about 50%-60%. But, Thanks...because of you I will contact the man that runs our local Habitat program and see how they are going to handle it.
    0Reply
  • Carmen Alexe
    Commercial Loan Broker · GA · Member since 2012 · 26 posts · 8 votes
    14y

    Jon, competing with the govt is difficult. I do sympathize with you. Personally I am not a fan of the too big to fail corporations that are part of the cronyism in America. Why they might do it? If they sell it to you for $30K and the loan balance is say $100K then they would probably be able to claim a $70K loss. But if they donate it they would claim a $100K loss while building their reputation how they help the poor (while they contribute to the destruction of the middle class).

    0Reply
  • Kevin Yeats
    Lender · Fort Pierce, FL · Member since 2009 · 825 posts · 486 votes
    14y
    Originally posted by J Scott:

    Not quite sure how they are subsidized? When has the government granted them money?

    The government *loaned* them $45B in TARP money, and BoA repaid the whole thing, with interest. That's certainly not a subsidy.

    How exactly is the government subsidizing them?

    * * *
    J Scott, I have to respectfully disagree. The TARP money given to every recipient was a subsidy.

    If B of A or any other bank found a profitable loan and needed to fund that loan with both equity and debt (deposits), they could have raised those funds in the respective markets and likely paid a higher rate to the equity holders or debtholders that they paid in interest to the government in TARP loans.

    Just the same as a borrower buying a home with FHA financing receives a subsidized interest rate.

    1Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Kevin Yeats:

    J Scott, I have to respectfully disagree. The TARP money given to every recipient was a subsidy.p

    Subsidies don't generally need to repaid. Your example about FHA rate subsidies is a great example -- it's money (a discount) that is given to borrowers, not loaned.

    TARP were loans...nothing was given away.

    Don't get me wrong, I was/am very much an opponent of TARP and of the "too big to fail" philosophy; im not supporting them, just pointing out that they were loans, not subsidies.

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  • Kevin Yeats
    Lender · Fort Pierce, FL · Member since 2009 · 825 posts · 486 votes
    14y

    J Scott, If the banks raised money by issuing debt (deposits) in the private sector they would have had to pay (say) 8% interest to attract the deposits. By accepting a "loan" from the government via TARP and paying only (say) 5%, the banks received a subsidy.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Kevin Yeats:
    J Scott, If the banks raised money by issuing debt (deposits) in the private sector they would have had to pay (say) 8% interest to attract the deposits. By accepting a "loan" from the government via TARP and paying only (say) 5%, the banks received a subsidy.

    That definition seems tremendously arbitrary to me.

    Are you saying that anytime a company raises debt below a specific rate, it is defined as a subsidy? What specifically is that rate? Does it change? Can you point me to some authoritative source for what that rate is at a given time?

    What if the debt is raised from the private sector below that rate -- is that considered a private subsidy as opposed to a loan?

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