Am I way off here?

[GettingThere]

I am collecting all the necessary docs for creating a corp right now (one of my 2009 fastlane goals) and was looking through some old posts on business credit.

I'll definitely be setting up accounts to build this credit for future use and to give myself options for taking advantage of opportunities...

My question pertains to something that morphed into my brain as I was contemplating this credit and my Corp entity. My wife and I own a townhome as a second home (our first home that we could not sell due to the bubble burst) and are currently upside down in it by (I'm guessing) $15-20k. My thoughts led me to the idea that, once my business credit is well-enough established, could I short sell the home to my Corp? Essentially, because I am the only person in my corp, it would get me out of owing the $20k loss, and I might be able to get positive cashflow out of it at that point with my tenant remaining in the home.

I realize this would cause a ding on my personal credit score for a bit, but $$ is $$ in the end.

Is this possible? Legal?

I'm a total newbie to this side of the Fastlane, and I'm trying to think creatively, outside of my normal comfort zone.


Thanks in advance,
John

 

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[CactusWren]

Does not sound legal to me, but I am no expert.

However, I recently signed up for a Free Diane Kennedy teleseminar. One is allowed to send short concise questions to be answered during the seminar. She used to contribute a lot here and is a wonderful source of great info. I do not know if they have spaces left.

The info is the following:

The FREE! 60-minute seminar “Strategies for Upside Down Real Estate†is Saturday, January 24th at 10 am Pacific, 11 am Mountain, Noon Central and 1 pm Eastern.
I’ve got even better news. The Founder of All Free Conference said he was tired of missing out on my other teleseminar calls that were maxed out at 200 or 250 listeners. So, he gave us a special line that can hold 500 people! If you haven’t gotten in before, you might this time. And just in time – because you don’t want to miss this call. (Thank you Craig!)
Please don’t wait though, the last three calls all had over 700 people attempt to register for these information-packed telseminars.
To register, please send an email to Teleseminar@DKTaxServices.com

Good luck!

 

[bflbob]

I don't think you'd be able to get this one done.

Usually, in order to do a short sale, you'd need to show you are broke.
Proof to show your net worth is negative, or that you are in bankruptcy might work.

Also, you can't gain from a Short Sale, so selling it just to avoid the upside down position wouldn't likely work once the bank saw who was signing for the Corporation.

Finally, owning Real Estate in a Corporation goes against the consensus of what entity to hold Real Estate in is. If and when the market reverses, it's likely that you'll have to pay more in Corporation Taxes on the gain than the $20k you're sticking your neck out for now.

 

[GettingThere]

Great info. Thanks for the responses. I had a feeling it may not be advisable, but wasn't sure...

-John

 

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