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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Your B.S. meter is blinking for a reason Posted by Travis-CA on September 19, 2003 at 10:12 PM In Reply to: Is this proposed transaction legal? posted by haywood on September 18, 2003 at 7:40 PM : I am selling a house. A loan rep. from Ameriquest, who is working with the prospective buyer called me with this proposal. : 1)He wants me to refinance the house thru Ameriquest, Adding the prospective buyers as co-borrowers on the loan. : 2) when refi-loan is funded, I retain 100% proceeds ($159K)less existing loan, & then quitclaim my ownership interest to the buyer. : 3) he says since loan proceeds are tax free I effectively have sold the property with no tax liability. : 4) the remaining borrowers continue to make payments on the loan. : Tell me if I'm wrong but my B.S. meter is blinking. It sounds like he is asking me to be an accessory to commit loan fraud & also tax evasion. : Are my instincts correct? : Should I call the Dept Of Real Estate? : Haywood Haywood, The loan proceeds are only tax free because you have an obligation to repay the money borrowed, if you extinguish your obligation to repay the money you will incure a tax liability not to mention the recapture of all depreciation since you are not 1031 exchanging the property. Be aware that failure to report this type of income is considered "Criminal Tax Fraud". Travis Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : I am selling a house. A loan rep. from Ameriquest, who is working with the prospective buyer called me with this proposal. : : 1)He wants me to refinance the house thru Ameriquest, Adding the prospective buyers as co-borrowers on the loan. : : 2) when refi-loan is funded, I retain 100% proceeds ($159K)less existing loan, & then quitclaim my ownership interest to the buyer. : : 3) he says since loan proceeds are tax free I effectively have sold the property with no tax liability. : : 4) the remaining borrowers continue to make payments on the loan. : : Tell me if I'm wrong but my B.S. meter is blinking. It sounds like he is asking me to be an accessory to commit loan fraud & also tax evasion. : : Are my instincts correct? : : Should I call the Dept Of Real Estate? : : Haywood : : Haywood, : The loan proceeds are only tax free because you have an obligation to repay the money borrowed, if you extinguish your obligation to repay the money you will incure a tax liability not to mention the recapture of all depreciation since you are not 1031 exchanging the property. Be aware that failure to report this type of income is considered "Criminal Tax Fraud". : : Travis Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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