Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I had an agent approach me about one of our properties. I asked if he had a buyer or was just looking around and he replied that he was actually buying for himself. He wanted to know if his commission would be covered and I said, "If you're the buyer, you wouldn't be paying a commission to yourself, would you?
He said that he'd actually be buying it with his wife but to me that seems like the same thing.
He then said that if another agent brought them in as buyers that agent would be looking for a commission, and I said, "Yeah, but you are not that other agent."
In any event, is there a standard procedure in this situation?
I'm not sure why he would want a commission if he's buying it for himself -- it's better to get a good price on the property and not have to pay income taxes on the commission.
I'm not sure why he would want a commission if he's buying it for himself -- it's better to get a good price on the property and not have to pay income taxes on the commission.
he might intend to use some of the commission to put back into the property (furniture, flooring, etc)
If he wants to pay taxes on a portion of his contract price, let him have a commission as long as it does not impact "NET PROCEEDS TO SELLER."
Just keep your focus squarely on "NET PROCEEDS TO SELLER."
I agree with you about the net proceeds to seller part, but why would he pay a tax on it? My understanding is that so long as the commission is used to reduce the price of the property and not taken as cash, then there is no tax on the commission.
Am I wrong here? Im not a tax guru, but I was under the impression this was commonplace.
I'm not sure why he would want a commission if he's buying it for himself -- it's better to get a good price on the property and not have to pay income taxes on the commission.
I think his theory was that the commission would be paid by the seller (thereby reducing the price).
I think his theory was that the commission would be paid by the seller (thereby reducing the price).
This is how I bought all my houses. I negotiated a price, with commissions, and then took the commission amount and reduced the price of the home. It's very common in my area to do that.
I agree with you about the net proceeds to seller part, but why would he pay a tax on it? My understanding is that so long as the commission is used to reduce the price of the property and not taken as cash, then there is no tax on the commission.
Am I wrong here? Im not a tax guru, but I was under the impression this was commonplace.
This is correct. It could also help him lower the value for his property taxes.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
