All Forum Posts by: Ralph S.

OK. I'll bite. Sorry if I make assumptions not intended.

$20K for a 30% interest in a property worth $120K. $20K of $120K = 17%, not 30%. So, your consideration for past rent amounts to 13%, or $15.6K. Unlikely even a benevolent uncle would be interested. Your past rent is water under the bridge. You agreed to the rent, and received whatever benefit from renting the space. I think it a little much, even after all the years, to ask that it now be considered for such a chunk of equity.

You've already indicated a difference between you as tenant, and your uncle as landlord, in willingness to do needed maintenance (the roof). Do you really want to be a junior partner in a property where you and your senior partner differ on what needs to be done and when? In the end, his share rules.

In order for this to work, and your $20K to be considered in the purchase of the 30% equity, you would, IMHO, have to turn over the $20K to your uncle, and then the business/partnership would get the repairs done. You might not get the control over the repairs you expect, or even how much he would spend in total. I'm sure a good lawer could structure the deal so that the funds were held in escrow for the repairs.

I think your tax question is very relevant. I'm not sure you could continue paying rent on a property you hold an interest in. I imagine there are a lot of legal details that need to be ironed out so this could work, if the two of you do come to any agreement.

You make no mention of how much of the total space you rent, or the type of building it is (I'm assuming commercial from your description). Also, whether the buidling is owned by himself, or through a LLC, whether it's profitable and whether the nephew has been getting a family discount on the rents for all these years. So, in a sense, I'm winging this with little information. But, I can't imagine he'd give up a 30% stake for 17% cash that goes right back into the property, possibly lose your rent and split the remaining profits 70/30. Sorry if I assumed things not mentioned or intended, but there are a lot of considerations.

Some counties auction tax sales on the internet. See
http://www.**************/help/index.cfm?fuseAction=TaxSale for one.

hmmm. so howcum the url became **** when I posted?

So, you're really asking a tax question. Remember, I'm not a CPA.

I found an explaination at

http://www.realtown.com/words/imputed-interest

It basically says that lacking an interest rate on an installement sale, the seller cannot determine by themselves, the amounts being paid towards principal and interest. In your example, the seller would be claiming too much towards principal, and not enough in interest. The seller would want to do this as the principal is taxed as cap gains, while the interest is at a higher tax rate, ergo, the IRS would impute the amount of tax paid at a rate they prescribe, and with amortization, a much greater amount of that $3,600 monthly payment (almost all), would be taxed as interest income.

So, in effect, your answer is yes, you can structure the deal any way you like, as long as you impute interest per IRS rules on your tax return.

Uncle Sam's gonna get his share, no matter how creative someone wants to be.

Alex
Think about bird dogging it to another wholesaler. Smaller paycheck, but much safer.

Anthony
You're question is rather open ended. Based upon your first and last post, maybe you should simply contact a lawyer.

All of the laws in WI can be found in the code Emilio refers to. But, to cover everything from contract law to imputed interest, is just too open ended. Do you have any specific questions?

Alex
Protect yourself. Sounds like you won't be a pricipal in this transaction and are expecting compensation. Make sure you don't provide "services" that require licensing in OH. Also, keep in mind your personal liability if things go whacko and someone ends up unhappy.

I don't get it. And, I understand implied tenancy, but, nobody of any legal standing has declared that, and accepting it as if it were is just being scared of one's own shadow..

CON CAN"T GO ANYWHERE ELSE UNTIL SHERIFF MOVES HIM! HE IS REQUIRED TO BE AT THE POINT WHERE SHERIFF PLACED THE MONTORING DEVICE IN THOMAS' APARTMENT AT WHATEVER TIMES WERE SCHEDULED!
CALL THE SHERIFF, EXPLAIN THE SITUATION AND GET HIM MOVED!

Yes, I meant to yell.

I think what Gamal is referring to is not a trust, as in drawn up by a lawyer, but a type of bank account called a trust account as it is the brokers way of holding deposits and other moneys from and for clients, that is separate from the brokers own business accounts. The broker is not allowed, in all cases I know of, of mixing client money with company money. That "comingling" of funds is illegal.
When I played broker a few years ago, all you had to do was to open such an account at any bank in the state. In Wisconsin, by state law, the trust account was interest bearing account, and the interest was paid by the bank to the state, and that money went to support varous low income housing initiatives.
I'm sure there are many flavors of trust accounts found throughout the country. But, it's main function is to separate company funds from client funds.

Back when family farmers were being foreclosed on, John Mellencamp wrote a song, and Willie Nelson was promoting concerts in support of family farmers. Anytime something like this gets extreme there will be protests. I don't think these home foreclosure protests will be that commonplace. Some, but not a lot of sympathy for the homeowner.

I'm waiting for the pending rampant inflation in our "recovery" to spark another round of rent control inititiatives, like in the early 80's.

Don't know 'bout Florida, Gamel, but in states I am familiar with, it's the Broker, not the agent, who is required to have the trust account to keep client funds separate from company funds..

You would get one from a bank, and they would be the ones to talk to about setting one up.