Is doing a simultaneous closing where I sell to a Note buyer = Dealer tax level?

General Real Estate Investing
1

I own a house ( actually alot of them ) free and clear Problem is I havent had them a year… ( TAX!!!) So IF I do a simultaneous closing witha "owner financed buyer and then sell the note to a note buyer does that = the HIGH dealers tax?

Should I do a equity loan and just rent the houses out indefinately?

Is rent to own a better tax angle for me? cause its past the 1 yr mark then for ownership

2

Why did you buy the house in the first place? What was your plan for the house?

3

This one was 1. under priced and 2 I have been wanting to do a rehab property

4

So your plan is to rehab and flip the property?

If so, then yes. Your sale is a dealer disposition. Creating a note and then selling the note at a discount may lower your taxable profit, but when the dust settles you still have a dealer disposition.

Change your plan. Hold the property for rental use for a couple of years. Do not lease option, just do a straight rental. Now when you sell the house, capital gains tax treatment applies, and you can do an installment sale tax treatment if you carry back the financing.

5

I didnt actually have a plan im pretty much open ears to ideas I know that i really enjoy working on houses and I really hate having tenants lol Im out of town so theres no way for me to micro manage a tenants complaints Is Rent to own a good option to offer ( I see alot of sites that seems to have a huge pile of listings down just that )

2nd issue Staying liquid without tons of fees etc

I bought this in cahs and am loving not having a mortgage over my head But I want to have cash available to do the next house ( im partial retired so this is all i have to do to keep me occupied) anyway do I take out a equity loan? Seems risky

6

First I would speak with a qualified CPA in your area. One that knows RE Investing. If you don’t know of one, attend a local REI Club and get a referral.

The other thing I will say is that TAXES are just part of the deal. Nothing you can do to avoid them. So you have to work that into your equation when running numbers prior to getting into a deal.

Yes you may sell on seller financing, but then you are cashing that out and taking a net loss on the note (selling at a discount), so you lower you tax hit.

Either way, you will get hit with taxes. If you are investing as a company though, you can bury some of that. Just speak with a competent CPA about how to work that with solid entity structures.