On Sunday, Some Guy was back at Hick's SUS2.5. Not about the truck deal, but about the house. As if we need anything else to worry about.
"Some Guy was there again. He said a buddy told him that he'll have to pay taxes on the money he gets for the house. Maybe up to 30%. I told him yeah, he'll get taxed for what he makes off the house. I don't know how much. He asked if we could write the sale for less. For $15,000. And pay him the rest in cash. I told him I didn't think so. But I needed to talk it over with you."
"The point isn't if we are ABLE to do it. But if we WILL do it. That amount of sale will be recorded. It will look like we bought a $15,000 house. Then when WE sell it, that will look like a much bigger profit. WE are the ones who will get taxed on it then."
"He said if he had lived in it for two years, he wouldn't have to pay the taxes. I said that's right, too bad he couldn't do that, but he said his name wasn't on the title then."
"So he's particular about how he wants to cheat on the taxes, heh, heh! I don't like the idea of cash. It will be hard to get. The bank tracks every withdrawal over $1000. There will be a record that we took out a lot of cash. You'll probably have to ask for it ahead of time. It might set us up for a tax audit in the future."
"One of my buddies said he took out a lot of money to buy a car for cash. The teller asked him what it was for, and he said, 'None of your damn business! It's MY money!' So they have to give it to you."
"I'll call The Pony, since we're partners in this. Just to get another opinion."
The Pony heard the story, and said, "Sounds like tax fraud to me. But I don't care either way."
We have decided this is not an option for us. It's either done like a regular real estate deal, with a cashier's check, or we are out.
As of this writing, it's Sunday night. On Monday, Hick will tell Some Guy (if he shows up at the title office) that we expect a regular (legal) agreement and purchase, or he can sell to his other (higher offer) buyer. I seriously doubt that somebody else will hand over that much cash.
I would make the same decision as you in regards to that house seller. I don't like the idea of the price of the house showing less than what you actually paid for it. Some Guy should be happy that he's making a sale without having to pay a realtor and for inheriting the house. Some people are never satisfied and always want more. Sigh! I hope he doesn't go back on his word to sell to Hick.
ReplyDeletePeople DO buy some large items with cash, but that would be asking for trouble when we sell, with a record of the purchase price. Almost ASKING for an audit, heh, heh!
DeleteI think Some Guy is not educated in the ways of real estate. He told Hick he "ain't never owned a house before, or much of nothin', really." I sure wouldn't understand, if I hadn't been to several closings over the past few years.
Oh I cannot wait until pt 3. Pony cracks me up! But I agree, it is not an option for you guys - I feel bad he has to pay taxes and he didn't even live in it for the two years but here we are :(
ReplyDeleteSuch a terrible problem to have! Being given a house, and expected to pay taxes on the profit of the sale. It's not like he was given a brand new house, and needs to pay yearly real estate taxes on it to live in it. He'll have the money from the sale to pay taxes with.
DeleteOooh! Definitely do NOT get involved in any shady tax dodge business. Unfortunate that you might "lose" that house, but far better to keep your records clean.
ReplyDeleteWe are not scofflaws when it comes to taxes. So Some Guy can take it or leave it. He SAYS somebody else offered him more, anyway...
DeleteWhen something sounds too good to be true ...... I wouldn't have done it either. You are right about carrying the extra tax burden on your end and you do not want an audit! It is such a hassle. We have been audited twice. The first one was handled by our accountant, and we did not suffer or benefit from it. The second one was on the RV park and I made The Man who had made some unusual transactions take care of it and that cost us $30,000! My part was documented and in order, his wasn't! Gee, I am glad to be reminded of it, so I can use that unfortunate event if I need it to get my addition ......
ReplyDeleteWe have never been audited. Now I must run out in the dark and rain and lightning, and knock on all the trees in the woods behind our mansion!
DeleteIt's good to have a war chest of transgressions to store up in case you need future ammunition.