Home-buying strategy may be hiding assets
Home-buying strategy may be hiding assets
Q: Let's say I have issues with the Internal Revenue Service that I am currently settling. And let's say my father buys a home with my cash that I have on hand. Can my father quitclaim the property to me after I have a resolution with the IRS? And, more importantly, can he do the paperwork in advance so that if he died before total resolution, I could then claim my property from his estate?
A: I don't know what sort of issues you're facing with the IRS, but I sure hope you have a lawyer and perhaps an enrolled agent (licensed to represent taxpayers before the IRS) helping you out.
What you're proposing sounds a lot like trying to hide assets from the IRS so that you won't have to pay them out to settle your IRS issues. I can't advise you on that count, but will tell you that if the IRS suspects you of hiding assets or not being honest with them about what you have, they can reverse any sort of transaction like the one you're hoping to accomplish with your father and you could face criminal penalties as well.
Now, let's say that your father is using his own money to buy a property and plans to leave you that property after he dies. Your father might want to think about establishing a revocable or irrevocable trust that names you as the beneficiary. The property he buys would go into the trust, and when he dies, you would own the property.
Please consult an estate attorney for more details on this and possibly other options that would be available to you.
Q: I have a quick question, which I hope won't sound stupid. If I use a real estate attorney for the purchase of a bank-owned foreclosed home, is it necessary for me to still have a real estate agent, considering I have already done the footwork myself?
A: Here's a quick answer: No. You don't need to hire a real estate agent if you use a good real estate attorney, have already found the house, know what you want to spend on it, know the neighborhood, understand what is going on with real estate in that community, and have already made the offer and had that offer accepted.
However, the bank may have a real estate firm marketing the property and may have already agreed to pay the agent a commission whether or not you bring a buyer's agent to the table with you. It's also possible that agent will get a full commission (both sides) because you don't have an agent.
None of that should concern you, as it's unlikely the bank will change the price of the home just because of the commission being paid.
Why would you want to have an agent? If you find an agent who is well-versed in foreclosure purchases, you may find you'll get an even better price by using an agent and you'll have someone to work on the purchase (which can take months!) while you continue on with your own life. Many great agents also understand the economics of certain neighborhoods and have great insight into specific homes or blocks that a person should avoid, particularly if there is a sense that more homes will be foreclosed on in a particular block.
But since you may have already found the home and done most everything an agent would do, it's probably not worth your time to hunt for an agent at this point in the game. I do like the idea of you using a real estate attorney, however. Buying a short sale or a foreclosure can be difficult and an attorney will make sure you are protected.
Q: I have concerns about my current mortgage, which is significantly higher than what my townhome is now worth. I purchased it in mid-2006. It appears I am not eligible to refinance or get a modification due to the upside-down status of my loan.
So far I have managed to keep my payments current. Is there anything else in the administration's programs that might help me? Ideally, I would love to sell my townhome and purchase something much less expensive with a lower interest rate, but it will probably be years before I can get a decent price.
How can I put myself into a more affordable home without just walking away and damaging my excellent credit?
A: Unfortunately, you bought at the high point in the market and home values have plunged since then. Depending on where you live, and how many foreclosures are in your neighborhood, your townhome might be worth 30 to 60 percent less than when you bought it. If you're in a place where the real estate market hasn't declined by that much, that's great.
But if your home has gone down in value quite a bit, then you may not qualify to refinance your home, as refinancing is limited to those loans owned or serviced by Fannie Mae and Freddie Mac and are no more than 105 percent of the value of the property.
If your circumstances have changed and you now are facing a hardship making your payments, you may be able to qualify for a loan modification with your lender. While there are quite a number of rules, some still being worked out, you may qualify for help. You should call your lender, go over your financial situation and see if you qualify for a loan modification.
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