AboutBruce Julien Expertise I can answer questions on and raise issues clients overlook in the areas of Estate Planning as far as taxes and distribution flow problems, Asset Management as far as appropriateness of assets and allocations for a desired goal and the value a consumer gets for their costs, Tax Planning related to Income and Estates, and Insurance/Annuity questions particularly in light of suitability to the consumer.
Experience I became a CPA in 1991 and began offering financial advice in 1992. I am a Registered Investment Advisor which means I sign off on putting clients' interests first in a fiduciary role.
Education/Credentials BA in Accounting, University of Maryland 1990
Question QUESTION: I am in the process of selling a vacant land and have made good agreement with the seller for a reasonable amount. Say, the total cost for the price of the land is $36,000.
In the terms repayment for which the seller will pay me, I have several options.
1) I can get all the $36K at once.
2) $2,000 every month for 12 months ( and $12k in the last month).
Which is the better ROI and lower taxes?
I also plan to use the money for a down payment to buy a foreclosure/short-sale/bank owned home soon. Would it be better to get the $36K at once to help w/ the down payment in case we found a home we like to buy and live in? Or, go with the $2K monthly payment and put that in a high yield saving account to collect interests. In that case, can anyone recommend me saving accounts and ideas for this type of transaction? I'm vague with it comes to CDs and Money market account.
Are there investment recommendations and tax advices I should know for this large transaction?
ANSWER: Was this a question from real life or a text James? There isn't any tax advantage in either case. Why would you question taking all the money up front , versus over a year, with no interest, from someone you might or might not trust?
Take the money up front and get a money oriented partner to go with your own real estate savvy so you make good deals for yourself.
This isn't a large transaction in anybody's book and if it is for you, reconsider the risks of buying foreclosures.
Good luck sir.
Bruce
---------- FOLLOW-UP ----------
QUESTION: Hell Bruce,
Thanks for answering my question. This is a real-life question, but numbers have been change to simplified. Well, if I choose installments or all the money up front, both have the same capital gain, correct? I'm asking because my seller may not have all the money upfront now, but made an agreement that within 8-month, will pay $2K monthly first and then pay the remaining balance off to me.
If I were to take the $2,000 a month, it would not be consider income, but of a transaction (selling asset) when I file my tax return, right?
Answer How you take the money doesn't affect the gain or loss on the transaction, unless you jacked up the amount due to an interest component you chose to add in for your delay in getting paid.
James I mean this with respect and as help - if you need help on issues of the nature you brought up, you really should get a atty or accountant to walk you through these kinds of transactions. Good chance if you run into a savvy but unscrupulous other party they'd screw you somehow.
