Another real estate question.

[Eihli]

Me and 2 other guys I play each put up $4k to start investing in real estate.


They both deal poker and will have no problem getting a loan on their own, but I've been playing poker the past 3 years and havn't paid taxes (stupid, i know) so my name will cause problems if it's anywhere on the loan.

First question: Should we look into forming an LLC, doing business as, partnership, or anything else?

Second question: If having no employment history doesn't affect anything and my name is somewhere on a loan (I've got a decent credit score), will all the transactions dealing with real estate throw a flag to the IRS and check where my money is coming from?

Third question: I want to pay taxes and will talk to a CPA. But if it turns out I didn't owe anything the past 3 years, what kind of fine am I looking at?

[danny31415]

[ QUOTE ]
Third question: I want to pay taxes and will talk to a CPA. But if it turns out I didn't owe anything the past 3 years, what kind of fine am I looking at?

[/ QUOTE ]


If you didn't owe anything, then there will not be any fines. If you did owe something there will be a penalty and interest on the money you owed.

[My_Name_Is_Hov]

Im not trying to be an [censored] , Im just curious what type of real estate deals you guys are going to be making with 12k?

[Eihli]

Rita damaged homes.

[mbb]

Here are two ideas. Massive disclaimer that I'm not an attorney; my real estate broker's license is only good in California; and I make no claims to know what I'm talking about.

1) Your partners may be able to buy in the property in their names, and then simply give you a gift of your share. When people get married, they commonly gift their spouses shares in their homes; it's also common for live-in couples, cousins who pass shares in vacation homes, and stuff like that.

They may not be able to do this without violating their loan covenants, so check this out first.

2) If the loan docs won't let them gift shares in the property, then try this:

Set up a property management service, or a project management service, or a contracting service, or a housecleaning service, or a blah-blah service. (Google says Louisiana law requires licenses to become a building contractor or a property manager, so you have to figure out something else that doesn't require a license.)

Anyway. You set up a service. The other two guys buy the property in their names, with the loan in their names only.

They then hire you to perform your service on the property.

In exchange for you performing the service, you get a fee of "$4000, plus 33% of any profits."

You can record that kind of contract. That means you're protected, and it also should look good to the bank that wrote the original loan--it'll look like a contractor's lein for $4000.

Remember my massive disclaimer.

And pay your taxes. Life is much easier above the table.

[Eihli]

Thanks for the info, very helpful.

[quote}
And pay your taxes. Life is much easier above the table.

[/ QUOTE ]

*sigh* Live and learn.

[SossMan]

[ QUOTE ]
Here are two ideas. Massive disclaimer that I'm not an attorney; my real estate broker's license is only good in California; and I make no claims to know what I'm talking about.

1) Your partners may be able to buy in the property in their names, and then simply give you a gift of your share. When people get married, they commonly gift their spouses shares in their homes; it's also common for live-in couples, cousins who pass shares in vacation homes, and stuff like that.

They may not be able to do this without violating their loan covenants, so check this out first.

2) If the loan docs won't let them gift shares in the property, then try this:

Set up a property management service, or a project management service, or a contracting service, or a housecleaning service, or a blah-blah service. (Google says Louisiana law requires licenses to become a building contractor or a property manager, so you have to figure out something else that doesn't require a license.)

Anyway. You set up a service. The other two guys buy the property in their names, with the loan in their names only.

They then hire you to perform your service on the property.

In exchange for you performing the service, you get a fee of "$4000, plus 33% of any profits."

You can record that kind of contract. That means you're protected, and it also should look good to the bank that wrote the original loan--it'll look like a contractor's lein for $4000.

Remember my massive disclaimer.

And pay your taxes. Life is much easier above the table.

[/ QUOTE ]

solid advice.

[schundler]

[ QUOTE ]
Here are two ideas. Massive disclaimer that I'm not an attorney; my real estate broker's license is only good in California; and I make no claims to know what I'm talking about.

1) Your partners may be able to buy in the property in their names, and then simply give you a gift of your share. When people get married, they commonly gift their spouses shares in their homes; it's also common for live-in couples, cousins who pass shares in vacation homes, and stuff like that.


[/ QUOTE ]

Gifts to spouses are tax-exempt, no matter the amount. The limit for a tax free gift to a non-spouse is 12k (i'm assuming the three of you will put in a lot more than 4k each..)