I have a friend that live in California that wants me to purchase her home and sell it back to her. She said a broker said she would save money. The purchase would be cash both ways. Also would I have problems with IRS she is giving me funds. Would they expect me to pay cash on it next year? Its 185,000 that would be deposited. I want to help but don't want to do anything illegal. I live in Texas.

I meant pay taxes on it? I don't have that kind of money and we own a home.

I don't get what she thinks she will gain. If you sell it for the same amount, then you will have no tax liabilty. However if you sell it for more, then you will.

This whole things smells shady and I would back off.

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Originally Posted by ScottGem

I don't get what she thinks she will gain. If you sell it for the same amount, then you will have no tax liabilty. However if you sell it for more, then you will.

This whole things smells shady and I would back off.

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I agree. One thing it might be intended to do would be for seller to realize capital gain or loss and get a new basis.

Her house is worth 324,000 but the bank said they would settle and let her pay off if it's a quick sale for 192,000. I don't understand it myself but she just lost her husband just wanted to help her save some money. I don't want to get caught up though.

But she did say that I would need to keep money in my account for a month. I know my bank would have to report to IRS.

Ahh, now it makes sense. She is trying to get a short sale to get herself out of an upside down mortgage. But if she has the cash to do this then she shouldn't need to. This is fraud and you need to stay away from it.

Wow... wonder why broker telling her it is legal. Thanks for info!

It depends on how long you own it, and yes it is sad that the owner can not merely buy out at the short sell.

I will not go as far and say it is illegal, it would be legal to buy it and rent it back to the owner. But someone has to have the cash to buy it from the bank or get a loan to do so.

If the friend has that much cash on hand, while upside down in the home, they just need to wait it out till values go up.

I know don't know where she found this guy. She want to put money in my account and then purchase it back from me after its in my name. I don't know how this IRS thing will work. It will be in my possession for a mintue, and money in my account for a month. It seems more complicated than not.

Hello mrs.

Nobody even mention the problem you'll have with the IRS. You are right. They ARE going to know about the money in your account. No, they're not going to believe that it isn't yours.

I'm not sure WHY she's doing this. I don't think it will help her at all. The bank holds the deed, and I don't think they're going to let you have it unless their loan is paid off, and I can't see how this cash purchase will DO that.

Nahhh. I'd stay away from this.

excon