Land Purchase Thoughts

[spazzyfry123]

I'm sure this will be a quick one but wanted to get some input from the brain trust. My money guy didn't return my call, and I'm impatient.

Quick story is that I own some acreage that I am actively building on. Directly next to it (it is split by an easement to access a few more tracts further back) is another tract that is also for sale. We've been running it through our head to purchase the lot and...do I don't know what with it. Been talking with the owner and we more or less have an understanding between what I'll pay and what he'll sell it for. We paid for a private appraisal that came back early this week and feel comfortable with it - all right, screw it, let's do it.

Fast forward to today, my dad gives me a call and says he wants to buy it now. Cool, no problem. We didn't really have plans for it and were more interested in "controling" neighbors than anything. Daddio ain't a bad neighbor.

Where I'm stuck is the guy that owns the tract is a piece of work. It was incredibly, overly difficult to purchase and ultimately close what we already have. I've made it through all of that with this new tract to the point of, let's just get it done. My initial plan was to go ahead and go through with the purchase, deed it over to my folks, and they'll just pay me direct. Handing it over for my folks to deal with direct, I fully anticipate the price to shoot up and blah blah blah (all speculative, but I've got some extensive experience with this guy).

What implications am I looking at? Am I going to get hit with taxes on the money "given" to me by my parents? Will my parents? Is this a no-no for whatever reason?

Thanks

[vreihen16]

Deed filing taxes in your area?????

[Alfisti]

You need an accountant. It's the USA, laws change from county to county, who knows what cockamaimy rules you have in place in the town in which you live.

[chassis]

In round numbers what is the transaction price you would pay at arm's length to the current owner?

[spazzyfry123]

Originally Posted by vreihen16

Deed filing taxes in your area?????

Doing the deed (heh) is super easy and cheap. Unaware of taxes.

Originally Posted by Alfisti

You need an accountant. It's the USA, laws change from county to county, who knows what cockamaimy rules you have in place in the town in which you live.

But I’m impatient and the money man didn’t call me back!

Nothing will happen without getting the “real” go ahead. This is more for conversation. I lurk through a lot of the threads - the back and forth with many walks of life is engaging.

Originally Posted by chassis

In round numbers what is the transaction price you would pay at arm's length to the current owner?

$100k

[kscarrol]

Not an estate lawyer but you can gift up to $15k per year to individuals with no federal tax and no impact to the lifetime exemption for your estate. A $100k “gift” to your parents will count towards your (and your spouse’s) lifetime exemption. Now that number is north of $13.5 million ($27+ million for couples) so unless your estate is larger than that, likely no impact by gifting the lot to pops, but you’ll want to confirm that with a lawyer.

[vreihen16]

How about putting the lot in a trust? IANAL or an accountant.....

[Watching The World Burn]

Originally Posted by vreihen16

How about putting the lot in a trust? IANAL or an accountant.....

You are anal. But not a lawyer or accountant, true. That's honestly all I have to add - I'm not american, so who knows what consequences there are.

In Canada, not much as long as you turn it over to your parents right away, otherwise, there is likely taxable capital gains to declare if you don't.

[vreihen16]

JTWROS?????

[bimmer456]

Are you just going to hold onto it and not develop? Because you will have to pay annual property taxes so if it’s not generating passive income might not be worth it.

[tranquility]

All I know is that if you're impatient and wanna forgo consulting the relevant professional(s), you're likely gonna get screwed. This is not the Klondike rush, have patience and don't spazz out like your username implies LOL.

[vreihen16]

Originally Posted by bimmer456

Are you just going to hold onto it and not develop? Because you will have to pay annual property taxes so if it’s not generating passive income might not be worth it.

...says the person who probably doesn't own a wooded tree farm in a neighboring state not too far from the OP, with property/school taxes setting me back a whopping $8.72 per YEAR.....

[bimmer456]

Originally Posted by vreihen16

...says the person who probably doesn't own a wooded tree farm in a neighboring state not too far from the OP, with property/school taxes setting me back a whopping $8.72 per YEAR.....

If it's $5000 purchase price then yes maybe $10 property tax or you could dump $5000 in the stock market and make just as much or more over a period of 2-3 years and pay nothing until you sell it.

[spazzyfry123]

Originally Posted by bimmer456

If it's $5000 purchase price then yes maybe $10 property tax or you could dump $5000 in the stock market and make just as much or more over a period of 2-3 years and pay nothing until you sell it.

California taxes are not the same

Plenty of agricultural incentives among other things, but even without the incentives, the taxes are effectively non-existent for undeveloped land out this way. Despite all this, this purchase isn’t really comparable to stocks. Something nice about having your piece of the rock to go walk around on. Tangible and enjoyable.

[vreihen16]

Some people (gasp!) don't buy land as an investment, but because they don't like neighbors or want a recreational retreat of their own. Acres of trees make good neighbors when piranha-filled moats are impractical.....

[bimmer456]

I suppose you could put your non street legal vehicles on private land to do whatever you want.

[vreihen16]

Originally Posted by bimmer456

I suppose you could put your non street legal vehicles on private land to do whatever you want.

You can also set up your own private shooting range, and play banjo music to scare the cityiots away.

In my case, I just sit there and enjoy the silence...while offsetting my massive carbon footprint.....

[spazzyfry123]

To follow up, seller went wild and upped the price about 60% from what we discussed. Needless to say, I did not purchase.

Loco.