I am a new to the wholesaling business and I'm in the process of constructed some offeres to purchase then assign or dual close. My question is this - If I have to do a simultaneous close as opposed to a contract assignment, will I be on the hook for any property taxes (even though I owned the property for only a few minutes)?
Any help would be appreciated as I am trying to understand all of the cost involved before I construct the offer.
Interesting question. You might talk to your closer on this to see what their policy would be. From what I'm hearing, and reading, many title companies are moving away from doing double or simultaneous closings because of some big fraud cases here in the state of Texas. The assignment would be the preferred method because you're never going on record as the owner. I realize that's not always possible. Let us know about the outcome :D
If you assign the property you never actually own it therefore you would have no liability for property taxes.
Property taxes or capital gains taxes?
Property taxes (ad valorem taxes usually assessed by the county) are normally prorated at closing. So you get $400 from the seller for four months of taxes, but then you give the buyer $400 for four months of taxes. Its a wash. The owner of the property at the end of the year is liable to actually pay the assessor for property taxes.
Short term capital gains taxes, yes, you are liable, but you are also liable for it as income gained if you assign it. Either way you are taxed the same (as ordinary income) so it doesn't matter.
Thanks everyone for the feedback. The information you hvae provided is very helpful. I plan to meet with a local title company (I'm in Southern California) next week and will let forum know how my deals progess.