Taxation and Structuring of Real Estate Installment Sales (Part 1 for Investors)

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Clint Coons Esq. | Real Estate Asset Protection

3 жыл бұрын

Let's discuss selling a property on a installment sale how to structure this deal. 👉 If you would like a FREE 45-minute consultation, you can request one here 👉👉 aba.link/glt
You've got a piece of property and you want to sell it to a tenant or a buyer on a installment sale. How do you structure this? Take notes and watch this video to prevent yourself from getting hammered with taxes from installment sales.
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Clint Coons, Esq. is one of the founding partners of Anderson Law Group, Clint has grown his legal and tax firm to over 400 employees by assisting real estate investors with creating and implementing solid entity structuring plans. His success in these regards is in large part due to his personal investing experience. A successful attorney, real estate investor, and speaker, Clint has used his innovative and dynamic strategies coupled with knowledge borne from experience to help thousands of people save millions of dollars and build real wealth.
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The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by Anderson Business Advisors with its main office at 3225 McLeod Drive Suite 100 Las Vegas, Nevada 89121. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship with Anderson Business Advisors or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice.
#InstallmentSales

Пікірлер: 46

@lavanyakala9593 3 жыл бұрын

Every video is very valuable 👍

@helena4950 3 жыл бұрын

I love your Video.

@harrisonsold Жыл бұрын

Thank you for this brother - needed this info

@ClintCoons Жыл бұрын

Glad it was helpful!

@Jc-sm5vi 10 ай бұрын

Thank you for such a great information, very much appreciate it! My situation is a bit different. My dad passed on to me the house and now I'm selling it under a year of owning it as FSBO under land contract. I know I don't pay capital gains due to being inheritance (please correct me if I'm wrong). The monthly payment I will be receiving from the buyer it's at 0% interest. Will the 0% interest affect me when I report this as income when filing taxes? Do I have to report it as income in taxes even if its an inheritance in installment payments?

@seyi8206 3 жыл бұрын

Thanks for the video Clint. Super useful, as always. I had one question regarding entity set up; do you foresee any issues with using a cell of an IL series LLC to hold the property, where that cell is owned 100% by the WY LLC HoldCo?

@ClintCoons 3 жыл бұрын

I do not but typically we set them up to be held by the parent.

@seyi8206 3 жыл бұрын

@@ClintCoons Thank you.

@MichaelRistau 3 жыл бұрын

Great video Clint. If the seller would have had all gains excluded using the primary residence gain exclusion, would they still get that cap gain exclusion when doing an installment sale? ( I would still expect them to pay OI tax on interest received.)

@ClintCoons 3 жыл бұрын

Yes if they elect to opt out of installment sale treatment in the year of sale (REQUIRED to make installment payments tax free)

@starr8111 3 жыл бұрын

Can you make a video on taxes and structuring when selling as a contract for deed

@ClintCoons 3 жыл бұрын

Excellent Idea

@SeanTong0 11 ай бұрын

Very insightful video Clint! Regarding the interest rate of the installment sale, is there a required range? With today's rate this high, I am thinking to do a sweet deal of say just 2% to seller in installment sales. Would that raise eyebrow in the eyes of IRS? Thanks

@ClintCoons 11 ай бұрын

Yes, absolutely you must charge at least the AFR rate that is published for the length of your loan. This rate is published by the IRS and changes every month. See www.irs.gov/applicable-federal-rates#:~:text=Each%20month%2C%20the%20IRS%20provides,for%20federal%20income%20tax%20purposes.

@robbystelly 3 жыл бұрын

Hello, what is the advantage of moving the deed into another llc after the sale vs just holding it in one’s own name?

@ClintCoons 3 жыл бұрын

When you sell the property, the promissory note/deed of trust you take back is an asset. This is what I often refer to as a safe asset because it does not create any liability for you. Placing it in an LLC protects it from creditors.

@WillBockovenCRE 2 ай бұрын

Can you install the depreciation recapture? I thought IRS required the seller must report the entire depreciation recapture amount - and to pay that tax - to the IRS in the same year of the sale.

@ClintCoons 2 ай бұрын

I recommend registering for a complimentary consultation with my team. We'll tailor our advice to your specific needs. Sign up here: aba.link/glt

@DavidMortaz 3 жыл бұрын

What would u recommend for protecting ourselves for renting an Granny Unit on our own primary residence? We are planning to register it legally as an Accessory Dwelling Unit (ADU)?

@ClintCoons 3 жыл бұрын

Look to get a HELOC from a bank. File a friendly lien if you can not get a HELOC. Place the property in an LLC and lease to another entity that will sublease the unit to the tenants.

@DavidMortaz 3 жыл бұрын

@@ClintCoons Thank you. I have to decipher that to see what entities we have in place that we can use. It sounds like we need 2 LLCs to do this! I hope this does not jeopardize our primary residence exemptions on Capital Gains during a sale.

@ClintCoons 3 жыл бұрын

@@DavidMortaz This is not the strategy for a personal residence unless you elect out of the installment sale deferral in the year of sale.

@user-ci5vs4of6m 11 ай бұрын

Clint - this is a super helpful video! A quick question regarding the portion breakout with capital gain, depreciation recapture, and cost basis...how is it determined how much goes towards each (capital gain, depreciation recapture, and cost basis) when a monthly installment is paid to the seller? Thanks!

@ClintCoons 11 ай бұрын

Here is the IRS form that will walk you through the calculation: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/www.irs.gov/pub/irs-pdf/f6252.pdf

@BrogeKilrain 3 жыл бұрын

You better read the new Govts bail programs

@lionessleola7223 3 жыл бұрын

Fill me in why is it always Wyoming LLC?

@greggrood7345 Жыл бұрын

Makes things way too complex for the average investor

@quincydwilliams8760 2 жыл бұрын

Hi Clint, I have done 10 installment sales last year. I signed a deed over to the buyers but it is held with their attorney until they complete the installment. Will I have to pay short term capital gains on all 10 properties? And would I have to pay that capital gain all in the same year? Also, I took $40k downpayments and used that’s downpayment to pay the downpayment and closing cost for the loan

@ClintCoons 2 жыл бұрын

How long did you hold the properties before you sold them on installment? 1 year, more, less?

@quincydwilliams8760 2 жыл бұрын

@@ClintCoons it was an immediate transaction. I bought the property with their money. Used their downpayment to pay downpayment and closing cost

@mr.randallinc.8591 Жыл бұрын

how did you lay these deals out exactly?? you wholesaled these properties or ??

@starr8111 3 жыл бұрын

Is the note entity holding llc a c-corp or s-corp

@ClintCoons 3 жыл бұрын

Typically an LLC

@chrisfelts1943 2 жыл бұрын

Why Wyoming LLC? Any perks or is that where you live?

@ClintCoons 2 жыл бұрын

Anonymity, strong charging order protections, no entity level tax for you, conservative court system are a few of the reasons.

@StuffBudDuz 4 ай бұрын

Good info, but what you did to the flippers was kind of crappy. "Flippers you want to stick around till the end of the video to find out what to do." Then at the end you tell them "watch next week." That sucks, dude.

@ClintCoons 4 ай бұрын

Is their a link in the video to the second one?

@harrisonsold Жыл бұрын

For an installment sale, on multi-family straight seller finance (no bank debt) for example, who typically pays property tax? If it is new buyer/investor does the taxable basis step up to the new agreed on purchase price? Thank you for the insights brother!

@ClintCoons Жыл бұрын

The buyer will pay the tax and the basis is stepped up.

@AberrantArt 3 жыл бұрын

I hear people tell the seller that if you do a seller finance that the seller can save money in taxes. It doesn't sound like that is very true after watching this. Is that a lie to get the seller to do seller finance?

@ClintCoons 3 жыл бұрын

Depends on wether you are a dealer or investor. If you have held the property for more than a year then yes it will defer income recognition over time. If you are a dealer (flipper) then you can get hit pretty hard.

@AberrantArt 3 жыл бұрын

@@ClintCoons thanks! And thank you for the great content. I'm new to your channel and really enjoying it.

@kcprohomebuyers1545 2 жыл бұрын

What is the benefit of deferring income recognition? @clint

@kcprohomebuyers1545 2 жыл бұрын

@@ClintCoons What is the benefit of deferring income recognition? It sounds like the original seller will still have to pay taxes on capital gains spread out over time, how is this different from income recognition? Does that mean they can avoid going into a higher overall tax bracket as well?

@ClintCoons 2 жыл бұрын

@@kcprohomebuyers1545 Correct. Investors use this technique because they want the interest money from the loan or its a way for a buyer to get into a property then later obtain a traditional loan to take out the seller carry.