I am currently doing a double closing and I need some help and advice. My scenario:
I purchase my friend (Jon) property in Pennsylvania for $40,000 and have the right to assign it to a new buyer. I found a buyer name Tony who wants to purchase it for $65,000.
I called a title company that do double closing. They told me that Jon have to transfer his deed to me, then I can transfer the deed to Tony. By doing this, I have to pay taxes on the deed transfer to me which is around 3.75%. Is this true??? Is there a way where I can do this transaction and don’t have to pay taxes on the transfer.
Is there a better way to do this?
Any advice or suggestions will be greatly appreciated!
Yep, it’s true. If you sell a property, you have to pay transfer taxes.
The only way around this is if you and your buyer would agree to an assignment contract (if your initial purchase and sale agreement allows it) for the $15k difference in price.
Of course, an assignment will allow the buyer to see your profit in the deal (and possibly even the seller depending on how it’s structured). If you don’t want that to happen, then a double closing is the only way to go.
The difference in prices is $25k, and you’ve got taxes of roughly $2k. So, you’re looking at making around $23k on the deal. Is that additional $2k really that big of an issue? If so, send them my way, because that sounds pretty good to me! ;D