Need Help From Maryland Investors On Correctly Filling MD State Taxes Form
Whoa filling these paper work myself makes me appreciate the services of professionals like yourself, I must say though that it is a worth while learning experience.
I am in the last phase properly setting up my LLC ordeal and that is properly filling out the Maryland combined registration online application form at
"https://interactive.marylandtaxes.com/webapps/comptrollercra/entrance.asp"
I need some insight on how to fill it properly to avoid errors down the line, could someone please guide me through it as it appears in the form online so that way I will not be asking anymore questions.
For my real estate business, I plan on holding some properties and renting them out and then selling some. I also plan somewhere along the line to hire some help. I am giving you all this information so that you can best guide me on how to fill out this online form.
Thanks in advance
The form you reference does not apply to a landlording business.
I agree with the response you got from Dave T at that other real estate website.
[ Edited by NewKidInTown3 on Date 12/05/2006 ]
Thank you all for your responses. You have been great
Even if you are acting in the capacity of a foreclosure consultant, your activity is not subject to sales and use taxes, therefore, it is my considered opinion that the form you reference is not required for your business.
Erick,
As a Certified Land Trust Consultant I beg to differ with your analysis and welcome your invitation to accurately describe this situation. This strategy does in fact exempt this transaction from the DOSC. We always retain at least a 10% ownership interest in the trust. That is what makes this transaction exempt. Your transfer of ownership to your Trustee is NOT a sale.
see Garn-St. Germain 1982, FDIRA, 12USC 1701-j-3).*
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender MAY NOT EXERCISE its option pursuant to a due-on-sale clause upon—
(8) a transfer into an inter vivos trust in which the borrower is and REMAINS A BENEFICIARY and which does NOT relate to a transfer of rights of occupancy in the property;
Your error is your statement: " If you transfer ANY ownership to someone else, it triggers the clause."
Transferrring your property to your Trustee is allowed as we agree. I always do it for estate planning purposes. As long as I remain a beneficiary and the Trust makes no reference to a transfer of occupancy, once the property is owned by my Trustee through the Doctrine of Equitable Conversion, I no longer own real estate, but personal property. I can transfer interest in the trust to anyone I want legally, privately, and without concern about the DOSC. THERE IS NO TRANSFER OF OWNERSHIP OF THE REAL PROPERTY. THAT IS OWNED BY MY TRUSTEE.
So now, my Trustee owns the property and I own the trust. I can assign an interest to my LLC or anyone else as long as I retain at least a 10% interest in the trust. I can retain 50% and lease you the other 50%. I can make you a 50% owner of the trust and you can legally take the mtg interest and tax writeoffs even though you are just leasing. Garn-St. Germain allows me to do this:
(4) the granting of a leasehold interest of three years or less not containing an option to purchase;
So, as long as I retain 10% or more, and my lease to you is less than three years, and DOES NOT CONTAIN AN OPTION (options are a DOSC violation) , it is exempt from the DOSC. Trust me, no pun intended, but I have bought and sold many properties over the years using this system properly without a problem -- ever.
Not a lawyer, just a Certified Land Trust Consultant. Happy New Year.
_________________
"Dissent is the highest form of patriotism" - Thomas Jefferson<BR><BR>
[ Edited by mtnwizard on Date 12/27/2006 ]
enaohwo1
You are referring to a Lease Option. When I lease to own using my land trust, there is NO OPTION (that would violate the DOSC which was explained above). I use a First Right of Refusal to buy at Fair Market Value, not an option. Hope this clarifies it for you.[ Edited by mtnwizard on Date 12/27/2006 ]
Hi King,
Very good point. However, rights of first refusal and options are different things. A right of first refusal means that if a seller receives a bona fide confirmed offer from a third party, the person holding the right has the opportunity to match that bona fide offer, however, there is no obligation by the seller to sell to the person holding the right for any amount other than the bona fide amount.
An option on the other hand is a contractual right held by the optionee that REQUIRES the seller to sell the property for a certain price dictated by the option.
In our scenario, the beneficiaries ONLY have rights of first refusal, not options. The language is fairly clear in that regard, but if there is any question, it could easily be resolved by including language along the lines of "Nothing in these documents shall be construed to create an option by any party unless expressly set forth herein."
Not a lawyer. Happy New Year.
[addsig]
I must say I am really confused now because you guys are saying buying houses on L/Os violate the DOSC. Please can you send me a copy of the document you use to get houses on contract, I think it will help me understand better what you are talking about.
I think so. First right of refusal is definitely not an option and does satisfy the option police. The kicker may be the set price vs. Fair Mkt value depending upon the individual property.
enaohwo1
I would love to furnish you the Trust documents, but Bill Gatten would probably have me drawn and quartered. He has the copyright and trademark rights. I recommend that you read up as much as you can on lease options, land trusts, the DOSC, etc., so you can be more prepared to deal with these questions as they arise. Feel free to keep asking. Good luck.
[addsig]
I take it that Texas has anti L/Os in their real estate laws, which other states have that rule? Does Maryland have anti L/Os rules?
Maryland has a strong foreclosure law, as do a few other states, but Texas is the only state to almost outright ban Lease Options.
[addsig]
Or...maybe a Purchase and Sale Agreement already filled out and dated a year from today? Or both (the Purchase and Sale Agreement dated in advance AND a Lease with a first right of refusal)? Seems like either or a combination of the two would work in Texas.
[addsig]
A lot depends on your state. In minnesota LLCs have very good protection from chsrging orders. NV or DE are the best for keeping your identy out of the public record.
As far as credit you can personally guarantee the loan. There are good books or a good lawyer or CPA can help.
I like keeping my property in a LLC it keeps the sue happy people at bay. To each his own.
James
Advantages/Disadvatages of LLC ownership -- as opposed to what?
To give advantages and disadvantages we need to know what you are comparing your LLC ownership against.
I think there are to many disavantages to make it worth while. Also search the forums on the web and see how many can actually say a LLC saved them on a suit. Maybe 1 in 10,000 ?
Yes you need a commerical loan and will pay a higher rate even with personal guarantee.
Rayh,
If you are buying investment property you are paying higher rates and most likely you will need a commercial loan. I am intrested in what the more Sr. of us think. Do you like LLCs or not? What states are the best or worse?
J
I am looking into doing the same thing, placing properties under and LLC. My whole reason for doing it is to keep the loans off my credit files, the protections is a added bonus.
Quote:
On 2006-09-18 00:19, redemption158 wrote:
I am looking into doing the same thing, placing properties under and LLC. My whole reason for doing it is to keep the loans off my credit files, the protections is a added bonus.
Your ability to obtain a loan will not change by putting this in an LLC if you guarantee the loan (likely required). You will be required to disclose the liability to the lender when you apply for a loan. They will pull your credit, just as they would w/o the LLC.
I would strongly suggest that you sit down with a good attorney because you have lots of issues here. For example, you mentioned transfering interests to your kids, so you should also explore family limited partnerships where you can discount the value of the lp at death. You should also weigh the differences between giving and not giving the property to your kids, because not giving it means they would inherit it at a steped up basis. There are pros and cons both ways, so I would sit down and discuss all options with a really good estate planning/trust attorney.
[addsig]
HI
I am looking to use DE LLC to buy a property in the UK .
The LLC does not carry on any business in the US and has business only in Europe,outside UK.
Is this feasible if I am a UK citizen but non-resident in the UK for tax purposes for last 5 years.
It seems there could be UK tax implications. Any comments on the feasibility of this would be appreciated, and what is the impact on UK tax liability for me and my wife.
Any recommendation for a good CPA / Tax attorney would be equally appreciated.
The only negative I can find in holding title in an LLC is that it protects your personal assets, but leaves the real property subject to liens and encumbrances.
[addsig]
WIZ - Would you then advise putting the real property ( Real Estate} in a Land Trust ? Personal in LLC or Inter Vivos?
Thanks
Tricky
Hi Tricky,
You almost got it. I place the property into a land trust, which is a special type of inter-vivos living trust, then take title in my LLC. The trust shields and protects the real property and the LLC protects my personal assets. Best of luck to you.
[addsig]