Setup:
I have a good friend who recently discovered that a late uncle had willed him a small (~9K sq ft) vacant lot in a mixed-use neighborhood. It's still what I would consider a "C" area, but borders on an area close to downtown which is quickly being regentrified. There are several other lots nearby which, according to tax rolls, are owned by RE Investment companies who also anticipate this upward shift.
Since he didn't know it was his (on the tax assessor's records as his uncles, but titled to friend), he obviously hasn't been paying property taxes. It is quite delinquent to the tune of ~ $25K, but since they haven't figure out who actually owns it yet, it hasn't been auctioned off. He has no cash, after a long and nasty divorce, and is in fact, planning to declare Chapter 11 bankruptcy.
Question:
We have offered to pay the back taxes for him, in exchange for the title, provided we share some of the profits with him when we develop or sell it.
1) Is there a tax accountant out there who can tell me if we would be obligated to pay (gift?) taxes on the full value of the land (~ $100K)?
2) Is there a way for him to quit claim it to an offshore account, in which he owns 10%? (This isn't the case, but it was a consideration) I'm not asking for legal advice here. Just general knowledge!
3) Is this a big enough lot to build a small multi-family property on? As that seems to be the direction the neighborhood is going. I don't see it becoming an "A" or even "B" neighborhood for another 2 years or so. So building an "A" type property, with high rents wouldn't work, I don't think, until the neighborhood is more cleaned up.
Any other creative ideas for him? His objective: he needs some cash, but doesn't want it to show up in his name for fear the IRS would seize it (part of the divorce/bankruptcy deal) Our objective: help a friend, and hopefully make a little coin for all of us in the process
Edit: LOL. After reading this, I realized that it sounded a little shady. That's not our intention!! Just looking for something I might be missing.
I have a good friend who recently discovered that a late uncle had willed him a small (~9K sq ft) vacant lot in a mixed-use neighborhood. It's still what I would consider a "C" area, but borders on an area close to downtown which is quickly being regentrified. There are several other lots nearby which, according to tax rolls, are owned by RE Investment companies who also anticipate this upward shift.
Since he didn't know it was his (on the tax assessor's records as his uncles, but titled to friend), he obviously hasn't been paying property taxes. It is quite delinquent to the tune of ~ $25K, but since they haven't figure out who actually owns it yet, it hasn't been auctioned off. He has no cash, after a long and nasty divorce, and is in fact, planning to declare Chapter 11 bankruptcy.
Question:
We have offered to pay the back taxes for him, in exchange for the title, provided we share some of the profits with him when we develop or sell it.
1) Is there a tax accountant out there who can tell me if we would be obligated to pay (gift?) taxes on the full value of the land (~ $100K)?
2) Is there a way for him to quit claim it to an offshore account, in which he owns 10%? (This isn't the case, but it was a consideration) I'm not asking for legal advice here. Just general knowledge!
3) Is this a big enough lot to build a small multi-family property on? As that seems to be the direction the neighborhood is going. I don't see it becoming an "A" or even "B" neighborhood for another 2 years or so. So building an "A" type property, with high rents wouldn't work, I don't think, until the neighborhood is more cleaned up.
Any other creative ideas for him? His objective: he needs some cash, but doesn't want it to show up in his name for fear the IRS would seize it (part of the divorce/bankruptcy deal) Our objective: help a friend, and hopefully make a little coin for all of us in the process
Edit: LOL. After reading this, I realized that it sounded a little shady. That's not our intention!! Just looking for something I might be missing.
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