posted by admin on Dec 24
So I’m from Canada, and the economy didn’t hit us nearly as hard as certain parts of the US. There are many places that are great vacation spots with CHEAP houses(I was looking mainly at Pheonix and places in Florida) that normally would have been like 3 times as much. I wanted to get a group of people(investors) together and split the cost of these houses, and rent them out as either vacation homes or rent them out to people during september-may and then rent as vacation from june-august, and then when the economy turns around, sell the houses for a larger amount than it was paid for. So what im asking is
1. is this even a good idea?
2. does something like this exist already?
*Sorry I left a few things out. It’s a very rough sketch, kind of just came into my mind. I do have a contact in Pheonix that could hire someone to do the cleaning after each visit, unless of course I was to rent the house out to live in, then the renters would be responsible + a DD. Also, I was just going to get my real estate liscence in the summer, and I guess grab some type of intl. real estate liscence if need be and choose the houses myself(I have enough airmiles to get to Arizona and back a few times). I can also handle all the bookkeeping myself and would just charge a very small commission for those things.
*And those tax issues seem like a problem, BUT I believe as a Canadian, even with foreign direct investment in real estate in the US, alot of the tax is reimbursed by the Canadian government.
December 24th, 2009 at 2:13 pm
Tax wise, this would be a mess.
You would have to ensure that 30-35% of the rent was sent to the IRS to ensure the tax bill is paid. If you did this as a partnership, you’d have to withhold 35%, file a partnership return, issue k-1 and then everyone would have to file a 1040NR to get their 5% back.
When you sell the property, the gain is taxed at 15%.
If you die before the property is sold and the share of the property has a fair market value of $60K, that person’s family would have to file an estate return.