I am negotiating for a local park right now and the owner says that in order to avoid capital gains tax he doesn’t want to sell until September. I’m good with that and would like to put him under contract with due diligence until then, but he’s saying that his lawyer won’t let him even sign a contract until September. Does this sound right?
If there’s a way to avoid paying the capital gains tax please share!! This doesn’t sound right… I don’t know how waiting, unless he’s got a 1031 oppty, will allow him to avoid paying the tax. Did you ask him how he’s able to do that?
If he won’t sign a contract, try to convince him to sign a letter of intent - I"m not sure how much teeth these have but it’s better than nothing.
Is it possible to do some kind of lease option with him? Take the park over now, stabilize it through the summer and buy it in September.
The lawyer is shopping for the highest and best offer for his client. Nothing sinister here.
See if you can get more detailed info on why September is the magic month.
Then you can tailor your offer to fit into his tax-directed decision.
Keep us posted,
Mike
I should have mentioned that the seller just purchased the property last September which is why he thinks he has to wait until this September to sign anything (and avoid the capital gains tax). I like the ideas of the ‘letter of intent’ and/or taking over the park now to stabilize.
Anyone have any experience where the letter of intent had to hold up?
Thanks for your responses!
He can actually sign now and nothing will happen since the sale wont close until September. That final sales date when money is received is what determines ST vs. LT. So he is trying to turn a ST gain into a LT gain. However, I’m certain that the attorney/CPA doesn’t want him to sign anything just in case something better comes along. Nothing wrong with that.
Thanks Gator, that’s what I was thinking too. Nothing wrong with wanting to keep your options open - except that I want to get him under contract!
Apparently, his lawyer doesn’t know the tax law! Shocking, right?
Show him the IRS code section 1031, etc.
It still surprises me how many investors get bad advice and NEVER check for themselves.
Put this under contract.
Thanks Mike, I’ll make sure and rattle off that IRS section and hopefully get it under contract.