I own half of a duplex as a rental property, I have been trying for years to get the owner of the other half to sell. He has now areed to sell the property under the following conditions. He wants $80,000.00 which is under the current market so I am ok with this, it is the terms that concern me. He wants a contract for $60,000.00 selling price and he wants $20,000.00 to be paid in cash after the closing. I am paying cash for the property so I don’t see a problem with this as long as it is legal??? Any thoughts from the experts would be greatly appreciated.
He wants the selling price to look as low as possible on paper for tax purposes. He has all those years of depreciation that have lowered his cost basis in the property. By looking like he only got 60k out of it, he won’t have to pay as much in taxes.
Justin is right. He wants to hide the other 20K from the IRS. Just be sure that you keep proper records for your accountant.