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Tax question on getting money from a family member for a real estate investment
Posted on 7/24/15 at 10:20 am
Posted on 7/24/15 at 10:20 am
Wordy title I know.
Here is the situation. I'm basically getting a private loan from a family member to purchase a house to flip. They don't even want us to pay them interest but we will anyway. They just want to give us the money and buy the house, they don't want to do it in their name.
My question is how can we do it and avoid taxes? I know nothing about this. From my 10 minutes of googling the max tax free gift is only 14k per/person. Can't do that.
If we setup an LLC to purchase the property, which we may do anyway. Can the LLC receive the money without paying taxes on it?
Here is the situation. I'm basically getting a private loan from a family member to purchase a house to flip. They don't even want us to pay them interest but we will anyway. They just want to give us the money and buy the house, they don't want to do it in their name.
My question is how can we do it and avoid taxes? I know nothing about this. From my 10 minutes of googling the max tax free gift is only 14k per/person. Can't do that.
If we setup an LLC to purchase the property, which we may do anyway. Can the LLC receive the money without paying taxes on it?
3
Posted on 7/24/15 at 10:36 am to barry
You can be gifted more than $14k in a year and avoid the "gift tax". A gift tax return will just have to be filed and be shown as an acceleration of gifting.
Some tax experts will chime in shortly and can give better advice than I on this however.
Some tax experts will chime in shortly and can give better advice than I on this however.
Posted on 7/24/15 at 10:41 am to Shepherd88
This would be roughly 170k for the future tax experts
Posted on 7/24/15 at 11:06 am to barry
Are you paying them back once you flip the property?
If so just have them write it as a note to the LLC
If so just have them write it as a note to the LLC
Posted on 7/24/15 at 11:22 am to misterc
possibly, we may use it for another flip afterwords, but not sure.
Posted on 7/24/15 at 3:38 pm to barry
Look at gift loans. They are loans from related parties that do not charge interest. You can stack them from several different related parties to get quite a bit of capital at virtually no cost.
Posted on 7/24/15 at 3:48 pm to Poodlebrain
Poodle knows more than me, but I was going to suggest setting up interest bearing loans, with the interest being "forgiven" be gifts up to the allowable amount. Remember, if a husband and wife gift to another husband and wife, that's 4 times the annual gift limit.
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