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Has anyone here ever sold a tax credit to a bank?
Posted on 5/10/26 at 4:21 pm
Posted on 5/10/26 at 4:21 pm
I have never heard of this, but did a little research after a friend mentioned it. I am finishing an historic home renovation and anticipate about $125,000 in tax credits as I get 45% back on the work between state and federal. I am about $100,000 gross income per year, so not an OT baller so $125,000 back in taxes could take a long time. I feel like if a bank buys it at (what my friend said: 95%) that would be better than waiting for it to come over years.
1
Posted on 5/10/26 at 4:34 pm to rpg37
Is it commercial use or personal residence? Quick Google search says it can only be transferred if income producing property.
Posted on 5/10/26 at 4:47 pm to TorchtheFlyingTiger
Personal residence. Plan to use it as a rental as well, but I doubt that would count.
Posted on 5/10/26 at 5:17 pm to rpg37
If it doesnt work, maybe use the credits for Roth conversions or capital gains harvesting.
Posted on 5/10/26 at 5:30 pm to TorchtheFlyingTiger
Yeah, I have an appointment soon with my CPA and I will go over this with him. He is an aggressive type so if it's legal he will push it.
Posted on 5/11/26 at 8:22 am to rpg37
quote:keep him around
He is an aggressive type
Posted on 5/11/26 at 8:32 am to rpg37
quote:
He is an aggressive type so if it's legal he will push it.
Is he a lawyer and a CPA?
Posted on 5/11/26 at 9:03 am to rpg37
You cannot transfer the federal credits.
You can sell the state credits, they typically sell for 85-90 cents on the dollar. The transfer of the LA credits is easy once you have the credit certification form from the state.
You can sell the state credits, they typically sell for 85-90 cents on the dollar. The transfer of the LA credits is easy once you have the credit certification form from the state.
Posted on 5/11/26 at 11:33 am to makersmark1
Nah, just a CPA. He runs the accounting school at Ole Miss. Good guy minus his college allegiance, but he gets the job done.
Posted on 5/11/26 at 12:13 pm to TorchtheFlyingTiger
quote:
If it doesnt work, maybe use the credits for Roth conversions or capital gains harvesting.
This is 100% the exact plan we have is before hearing of this. To purchase this home the way I did I sold a lot of stock and had about $80k in gains. I can also back date a year so we would use a home sale as well. Looks like we can be very creative.
Posted on 5/11/26 at 12:44 pm to rpg37
The problem is that unless you are a materially participating real estate professional, the credits are passive credits and only offset the taxes associated with passive income.
Additionally the 20% federal credit is recognized over a 5 year period (so 4% of the 20% each year for 5 years).
Additionally the 20% federal credit is recognized over a 5 year period (so 4% of the 20% each year for 5 years).
Posted on 5/11/26 at 12:48 pm to hedgediver
Also the federal credits are issued typical based on a part III certificate from the national park service that validates dates and costs…. I am not so certain about your ability to be creative on the dates. I think you need to have a pretty detailed conversation with your CPA to make sure you understand the impacts of both the federal and state credits.
Posted on 5/11/26 at 1:26 pm to hedgediver
This is correct. If I was to sell the home, the credits would be transferred to the next buyer. Needless to say, this is definitely a five year hold minimum. You can indeed back date one year on tax records, but how much can I offset in a singular year is indeed the key question.
You are on it, though. We are finishing the rehab this week and then will start part 3 of the tax credits. This will then be sent (pictures and narratives) to HQ for approval which will be about one month. We hope ecerything is settled by July 1.
You are on it, though. We are finishing the rehab this week and then will start part 3 of the tax credits. This will then be sent (pictures and narratives) to HQ for approval which will be about one month. We hope ecerything is settled by July 1.
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