Equity Holding Trust
Ive been reading up on land trusts.. the following is part of the information. It is a very interesting concept and capitol gains can be put back indefinately.
Using an Equity Holding TrustTM to exchange ownership eliminates the expenses associated with a
conventional sale including real estate commission, loan points, fees and closing costs.
The Equity Holding TrustTM system allows a mortgagor (a would-be "seller"
to place his/her property
into a special revocable trust and after so doing, sell a portion of the trust's beneficial interest to
another party, rather than selling the property itself. Upon the buyer's acquisition of the beneficial
interest in such a trust, and upon its possession of the trust poperty, virtually all of the same benefits
can be afforded the buyer: income tax deduction, use, occupancy, possessory interest and
profit-potential as would be any homeowner.
REI Ray:
No Kidding???
Now I'm gonna go out and close 34 deals by the 29th of DEC!
Happy Investing!
Derrick Ali :-D
Hmmm, no capital gains when you sell an interest in the trust?
There are very few instances where the IRS will allow you to receive tax free income. You will have to give us a reference to the tax code that supports your statement.
Until then, I think the wise course of action would be to consult a licensed tax professional before acting on your own conclusions drawn from something you read on the internet.
Bill Gatten is the guru ..Im not.
Try reading on ...Landtrust .net.
Click on : Articles
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Read : Febuary 12 2004
I find it rather interesting reading. To bad It doesnt work on commercial properties. There is a group of people that swear by this concept ( Especially Bill Gatten) Its very complicted to me at this point but...Im sure if I really applied myself it wouldnt be THAT difficult. Very creative guy ...that Bill Gatten.
BTW...
tax code reference: IRC{{671.et seg. ( i.e., "et seg" means everthing else in the sequence).
EG...Outlaw - V.- US 494 F2d 1376 (1974)
Merry Christmas
New Kid Wrote:
Quote:There are very few instances where the IRS will allow you to receive tax free income. You will have to give us a reference to the tax code that supports your statement.
I believe what both YOU & REI Ray have said is mostly K-Rekt...
Here is some clarification on ordinary Taxable income vs. Capital gains:
In a transfer of Beneficial Interest in an Equity-Holding trust(tm): Any Income Gain before termination is considered Ordinary Income
vs.
That of a Conventional REAL ESTATE Transfer which is a totally different category... CAPITAL GAINS
Please Check with your Tax Pro for the EXACT handling.
NOTE:
My own personal experience and tax advice given has this type of income viewed as: Ordinary
The NEHT(tm) is not a complete (100%) transfer of Beneficial Interest the Settlor Keeps 10% which the IRS IRC Rules deem allowable and is not viewed as an installment sale.
Further I do not believe REI Ray said that it was TAX-FREE though you could Creatively & LEGALLY defer Tax Consequences for a 20 Yr Period or longer using this model.
DISCLAIMER: I am not a Tax nor Legal Professional just a Reformed Landlord Pre-Foreclosure Loving LandTrust Junkie!
Happy Investing!
Derrick Ali :-D
[ Edited by DerrickAli on Date 12/25/2004 ]
Quote:reiray wrote:
BTW...
tax code reference: IRC{{671.et seg. ( i.e., "et seg" means everthing else in the sequence).reiray,
I looked up your reference. Here is a relevent portion of IRC Section 671
Where it is specified in this subpart that the grantor or another person shall be treated as the owner of any portion of a trust, there shall then be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under this chapter in computing taxable income or credits against the tax of an individual.Now, as to the interpretation. I am not a tax professional, so my perception may be incorrect. With this disclaimer, I see this language as saying that any income earned by a revocable trust is taxable to the grantor.
If the trust sells an interest, then the proceeds of the sale are taxable income to the trust and consequently to the grantor. Under your scenario, selling an interest in the trust to a third party generates taxable income to the trust which passes through to the grantor. I leave it to qualified tax professionals to resolve whether that income is a capital gain or ordinary income.
New Kid:
Thanks for the excerpt...However:
REI Ray NEVER SAID
TAX FREE ..see the following or re-read the initial post:
Quote:capitol gains can be put back indefinately
Additionally neitheir of us has said that NO TAX Consequences occur by Transer - in fact the OPPOSITE.
Indefinately Deferrment is almost the same but NOT the Same as Tax-Free---Ya Think???
(smile)
Happly Investing!
Derrick Ali :-D
No apologies needed Mi Compadre!
;-D
DerrickAli and Newkidin Town2
Morning Guys.
Thats why Im glad I found this site. You guys are great. Yes..I am new to this site and also to real estate investing but Im learning a lot here. We are all going for the same thing, but life is much more interesting when surrounded by Inteligence and Creativity. I truly admire both qualities. We may at times disagree but you know you are a class act when things are talked about, shared and GOOD comes from it. Im here to get knowledge as are many others and I just want to thank you both for your obvious Wisdom. I agree with DerrickAli that apologies are not needed but It sure shows the measure of a man...well ..enough said.
Again...thanks
REI Ray:
You are tooo Kind!
(smile)