I have ahouse I am selling and the buyer wants to get cash back at closing. I am selling him the house for 131K and he wants the contract at 150K.
Tax wise, will I owe taxes on the diff between what I bought it for and the 150K even though he is getting cash back of 19K?
Also what about the legal aspects of this, is that even legal to do?
Thank you
You will pay the same taxes either way because you would be giving the seller an allowance that will adjust your selling costs.
As long as you put the deal at the higher price on the HUD-1 statement and the lender knows about it (it's disclosed), you're fine. If BUYER doesn't want to do that, you know why. If the guy didn't want to disclose it, I'd call my district attorney and advise them about this guy.