Real Estate Fraud

This is an activity that is purposely done to misrepresent information on real estate documents. It also involves the money transfers. It is also called mortgage fraud. The reason that it is referred to as this is that the fraud generally takes place with the mortgage application. Real estate fraud, in the United States, can have heavy penalties like imprisonment and large fines.

Such a crime can be committed in many different ways. It appears to happen more often when property prices are on the rise. Because of the simplicity of the fraud, some types are seen more than other frauds. Some are not as common because they are more complicated. One of the common forms of such fraud, according to the IRS is preparing two settlement statement sets that are different from each other. In one of the statements, the accurate property-selling price is written, which the buyer receives. The other one will depict a higher selling price that is exaggerated. When the mortgage lender approves the loan for the exaggerated price, the seller is given the amount that is stated in their copy of the settlement statement. The one who committed the fraudulent settlement statements will keep the money that is left over. If there are other conspirators, the money will be divided among them. It could be the entire excess money or a percentage of it.

Using qualification that are fraudulent is another type of real estate fraud. These fraudulent qualifications are used when applying for a mortgage or home loan to help them get the mortgage. In this form of real estate fraud, the real estate agent will usually assist the buyer. The fraudulent qualifications can include fabricating credit reports or history of employment. These two involve the obvious misrepresentation of data but not all real estate fraud is easy to see as these two examples. If buyers who do not intend to commit real estate fraud because they do not know the laws can accidentally commit mortgage fraud.

If a buyer has a down payment by using money that was given as a gift it is legal. If this gift is re-paid to the who gave the gift, this is considered a case of real estate fraud. The gift used to make a down payment cannot be repaid for it to be legal. Another type of property fraud is when the buyer accidentally fails to disclose any financial liabilities on their mortgage application. It becomes fraud when it is not taken care of before the loan is approved. Property flipping can become real estate fraud if you make false representations about the value and condition of the property when you sell it for a much higher price than you paid for the property.

Investing In Real Estate, Flipping Houses, And Income Taxes

Problems arise when real estate investors don’t follow federal and state tax laws. This is why you need professional advice. Although I am not a tax advisor, here are some common mistakes beginning real estate investors make by not understanding tax liabilities:

Flipping Houses

The reason flipping houses is a mistake for some beginners is that they don’t know the income tax consequences. One problem with flipping houses, or selling too many properties too quickly, the IRS could say that your real estate business is your trade, subject to ordinary income and self-employment taxes.

Self-employment tax, a social security and Medicare tax primarily for individuals who work for themselves, is similar to the social security and Medicare taxes withheld from the paycheck of most employees. The self-employment tax rate costs you 15.3{8dac5dcb9f942b09754d29d206f8ecad2fe1c20701ee3d2765cee79f805470e6} of your profits. (However, this may provide retirement benefits.)

Rehabbing Houses

Another common mistake that beginning investors make is selling a property after holding it for almost a year. Some rehabbers work part time on a fixer and take six months to get the house ready. Add on two months to sell with a 60 day closing, and they’re up to ten months. To take advantage of the low 15{8dac5dcb9f942b09754d29d206f8ecad2fe1c20701ee3d2765cee79f805470e6} capital-gains tax rate, you must keep the investment property for at least a year before selling. If you sell before a year, your capital gains tax rate could eat up a significant amount of your profits.

If you’re rehabbing houses, be patient. You could save thousands in taxes by holding your property just a few more weeks.

1031 Exchange

However, the Internal Revenue Code provides real estate investors a way to defer capital gains taxes indefinitely. Section 1031 of the Internal Revenue Code provides a tax-free exchange. Also known as a “like-kind” exchange, this code allows you to sell a business or investment property and defer capital-gains taxes by immediately reinvesting the gains into a similar piece of property. The key, replacing a business or investment with similar property, means that no gain gets paid to the investor. Any profit taken out of escrow gets taxed. This means that beginning investors might take out a portion of the profit after they carefully explore their tax liabilities. In other words, talk to an accountant and find out what your tax would be according to your current usual income. Many business owners take advantage of this because they have many business deductions.

The big mistake beginning real estate investors make doing a 1031 tax-free exchange, taking possession of the profits, voids the tax deferment. You must declare the sale of your property to be a part of a 1031 exchange before you sell the property. Then you have the money placed in a trust account held by an intermediary until you purchase the new investment property. You have 45 days to identify a replacement property and 180 days to close on the new investment. You can’t purchase a primary residence or a vacation home with funds from an investment property and defer taxes in a 1031 exchange.

The best advice for beginning real estate investors:
Talk to an accountant.

Would you be better off making extra money, even if you must pay taxes?

2005 Jeanette J. Fisher.

k Rollover To Ira Important Facts You Need To Know Before You Make A 401k Rollover To An Ira

Some Questions To Think About

You are changing jobs and about to make a 401k rollover to IRA, of the traditional type. Before you make a 401k rollover to an IRA, let me ask you some questions and maybe give you a few things to think about.

Have you been happy with your returns over the last few years? Most 401ks are dependent on mutual funds and the volatile stock market. So, many people have not been happy to see their quarterly statements, lately.

They Could Have Been Smiling

If they had taken a 401k rollover to IRA, of the self-directed or self-managed type, they could have been smiling. You see, self-directing offers more investment options than the typical stocks, bonds and bank CDs. I am sure that somewhere along the line, someone told you to diversify, but they might have only meant to invest in a variety of different stock options, while keeping a little money in the safety of a bank CD or a government bond.

You Can Diversify

If you make a 401k rollover to an IRA that is truly self-directed, you can truly diversify. Sure, you can keep some stock market shares, particularly if you hold some of the blue-chips. But, you might also want to consider other, more unique investment options.

These days, if we want to secure our retirement, we need some more unique approaches. The average rate of return is no more than 5{8dac5dcb9f942b09754d29d206f8ecad2fe1c20701ee3d2765cee79f805470e6} per year. Do you know what the inflation rate for the next 20 years is expected to be? 5{8dac5dcb9f942b09754d29d206f8ecad2fe1c20701ee3d2765cee79f805470e6}.

Dont Continue On The Same Path

If you make a 401k rollover to an IRA and you continue to earn only 5{8dac5dcb9f942b09754d29d206f8ecad2fe1c20701ee3d2765cee79f805470e6}, then your account value really will not have grown in 20 years, because the buying power will be exactly the same. Of course, compounding interest can get you a little bit ahead in this numbers game, but imagine if you could earn 10, 20 30 percent or more over the next twenty years.

The Hidden Real Estate Market

If you make a 401k rollover to IRA and invest in real estate, you can easily see those kinds of returns. There is one sector of the housing market that is doing quite well, right now. You should learn more about this hidden real estate market before you make a 401k rollover to an IRA, if you want to be wealthy in 20 years, that is.

Heres a little more advice. Make sure that your 401k rollover to IRA is a direct-rollover or transfer. Theres less paperwork involved and the transaction is not reported to the IRS.

The 60 Day Time Limit

A 401k rollover to an IRA that involves you as the middle man requires that all assets be liquidated and you only have 60 days to find a new custodial company. If you make a mistake, you could end up paying heavy taxes and penalties at the years end.

You also might want to consider a 401k rollover to IRA of the Roth type. That way, you could accumulate tax-free wealth over the next 20 years and regardless of how much you took per year after retirement, you would never pay taxes. Its something to consider, at least.

An Apartment Complex Is Not An Easy Asset To Liquidate

There are various factors that really matter when you are thinking to sell away your apartment complex. Though it is not as easy as it might appear as your apartment complex is not an easy property to cash. However, one needs to take utmost care and should not make any mistakes if you have invited the people to purchase your property. You are free to hire a broker who might make the selling procedure easy and lucrative, but you must be actively involved in the procedure as well. If you think it is time to put your multifamily building or complex up for sale, there are lots of things you need to consider. And also keep in mind, presently you can’t think buyers coming to your door to buy your complex, truly, you need to put in a lot of efforts to sell your complex.

Here are some basic things you need to consider while selling your apartment complex:

-Condition of your apartment complex: The complex you are planning to sell should be in a decent condition with no evident cracks and leakage or drainage troubles. The buyer is going to shell out a huge sum, hence he wants all that is perfect as his preferences are choices are comparatively higher these days. So it is better to maintain your complex clean and tidy. The condition of your complex should look up-to-date so you should check each and every part of your building. You may have to get your complex white-washed, carpets changed and all the essential installations done. Your lawns should also be equally clean and fresh to impress the buyers.
-Property attributes: Purchasing a complex might be a form of investment and for some it might be an exciting occasion. Just look around your complex as if you were a buyer. If you were in his shoes, what would be your explanation of a “dream house”? Is your apartment complex worth a dream house? So you must see the quality of your apartment. Thus, your apartment should reflect quality so try and improve its quality. It should be worth the value you demand from any buyer. The appearance and attributes of any apartment complex do matter a lot for a genuine buyer.
-Property price: See what property rates are existing in the market. While deciding the price of your apartment complex, you should talk to the legal property dealers who may help you to fix a suitable price for your complex. You Have to think about the location, size and the years of the property while fixing the rate.
-Taxes you need to pay on the sale price: Remember, you need to pay a good percent of share to the IRS on the profit you earn after selling your complex. There are many legal regulations and rules which must be agreed. You should try and understand the tax exemption rules to make the most out of your sale. You can appoint an accountant who will assist you at every step and offer you as much as tax relief as possible.
-Beware of cheaters: There are several bogus buyers who may cheat you. Never sign any lawful documents without correct supervision of the property lawyer. Chances are that you might not get the perfect price for your property and may be cheated. It is better to take a few opinions before signing the deal.