Internal Revenue Service and Land trusts

General Real Estate Investing
1

Hello and good day to all that read this post…

I have read that a real estate investor can structure a land trust in a manner that the individual would not be designated as a dealer by the IRS, my inquiries are the following:

  1. Does the time duration that the property resides in the land trust determines the manner the IRS taxes your transaction?
    For example, if I place a property in a land trust with the LLC being the beneficiary for a period of three months as opposed to 9 months, will placing the property in an Land Trust for such a short period of time exempt me from paying dealer taxes when I sell?

  2. Does proper legal wording play a role when placing a property in a land trust to avoid being label as a dealer when you finally decide to sell?
    Note: Question 2 is posted due to the fact that I have been searching for a real estate lawyer that is familiar with land trust and a good percentage of these individuals are either:

  3. Not familiar with this concept

  4. Vaguely familiar with the dynamics of land trust

I endeavor to understand the proper legal terminology or structure of the land trust in order to present my investment parameters or legality requisites clearly to a real estate attorney that specializes in asset protection.

Note: The above mentioned statements are not intended to insult or degrade any real estate attorneys/investors that are members or view this site. If I have, my sincerest apologies.

Thanks again to all that review this post and successful investing to all.

2

It is the primary INTENT driving the acquisition of the property that determines whether the sale is a dealer disposition.

You can take as many intermediate steps as you want in an effort to disguise your intent, but when the IRS decomposes the deal and steps back through the transaction, a dealer disposition is still a dealer disposition.

3

Thank you for your feedback Dave T. Have a good day.