All Forum Posts by: Arthur C.

Hey my beloved BP community, I just received two offers for my first flip property that I did in Washington DC. I need some of your inputs to determine which offer below would give me more profit or benefits from tax perspective. 1) First offer: $400K, which was what the listing price is for my property, with no closing help. 2) Second offer: $412K but with $12K seller credit for closing help. This nets out to $400K. Please keep in mind, the transfer and recordation rate is 2.2% (seller and buyer pays 1.1% each) for properties sold at $399,999 or less. The transfer and recordation tax rate increases to 2.9% (seller and buyer pays 1.45% each) for properties sold at $400K or higher. I am looking forward to getting your inputs Thanks, A

Hello everyone, I am in search for a good contractor in Baltimore/Catsonville, Maryland that does renovations for a good price. Any references would be greatly appreciated. I am looking to do my first flip project. Thanks! AC

@Michael Plaks

Make total sense to me. So, for us to look over at what it says under our legal ownership, I am assuming that we should take a look at the deed of the property, correct? If not, what docs would we need to verify and confirm our legal ownership? Thanks for all of your inputs. They are very helpful and that's really nice about the forum here on BiggerPockets!

@Michael Plaks

We are actually in tenancy in common with 50% / 50% ownership for both lots (land lot and the residence property). The land lot came along with the purchase of the adjacent residence property back in 2011. Then we had the developer construct the 2-unit condo building that was completed last summer. The contract with the developer generally stated that we own the land lot that we were looking to build 2-unit condo building. That was all. 

I am assuming that this is much better news since this would be implied as if we each owned 50% portion of the total 2-unit project rather than if it specifically stated/documented somewhere that we own 50% of each unit. Don't you agree?

I realize this is somewhat complicated but I believe I should not be taxable on 50% portion of the lower unit I was transferring my interest to my co-business partner because I did neither gain nor lost anything by the exchange. We were just simply exchanging/swapping our 50% interest of our portions in our respective units so that at end we would each own 100% interest in each respective unit. My co-business partner will sell the lower unit and he will be the only one obtaining the entire sales proceeds not me. The title company intends to issue him a 1099 on the entire sales proceeds from the sale of the lower unit. That said, does this mean I am off the hook for any capital gains triggered from the sale of the lower unit from your perspective?

If someone else with wealth of knowledge in that field can also chime in, that would be greatly appreciated. 

Can someone with lots of familiarity in real estate taxes confirm whether or not it would trigger capital gains when my co-business partner and I exchanged our 50% interest in each of our respective unit of the new two-unit condo building we had the developer constructed for us. At end, I would own 100% of the upper unit and he will own 100% of the lower unit. I intend to live in my upper unit for at least two years to qualify Section 121 -- $250K capital gains exclusion.

However, I was told by my title company to confirm with a real estate CPA whether or not the exchange of 50% interest of each respective unit between two parties can be legally avoidable. The argument that we originally owned 50% of each of the two units and we wanted full ownership to one of our respective units hence we did the exchange. It doesn't make sense for me to incur capital gains into that exchange when I actually intended and planned to live in it for at least two years for capital gains exclusion.

Any of your help is greatly appreciated.

Thanks,

A