Home › Forums › General › EHTrust/EHT Topics and Creative Real Estate Financing › Tax Lease Question
December 6, 2003 at 2:58 pm #154
Bill or Anyone,
If you set-up a Nehtrust for the purpose of doing a tax lease how are major maintenance issues handled?
For example, if the RB is getting property tax and mortgage deduction, but no future equity, and the roof blows off or the furnance goes, how does that repair money get accounted for?December 8, 2003 at 11:21 pm #7672
Remember, a Tax Lease is really just an Equity Share with different perecentages, but still with all the responsibilities contractually falling on the tenant.December 8, 2003 at 11:59 pm #7673
Could you also offer to give the RB a credit against future equity from appreciation and principle reduction?December 9, 2003 at 12:17 am #7674
Yes, that’s what the Contingency Fund is for…exactly that.
Remember that with the Eq. Hldg Trust Transfer, you can do anything you want.December 9, 2003 at 12:28 am #7675
It’s my lucky night realtime posting and responses
I didn’t mean to say give them equity. What I meant to say was show the RB making a contribution to the trust for the repair value.December 9, 2003 at 12:41 am #7676
Sure, as I said, just make sure everyone understands that a contribution to the Contingency Fund is not a down payment or buy-down of sale price.
BillDecember 10, 2003 at 8:21 am #7677
Besides using the [blue]Contingency Fund[/blue] for a [red]major repair[/red], isn’t this what insurance would be used for, if necessary?
SalDecember 10, 2003 at 11:45 am #7678
mcduffeeMemberQuote:If the RB is getting property tax and mortgage deduction, but no future equity, and the roof blows off or the furnance goes, how does that repair money get accounted for?Quote:Besides using the [blue]Contingency Fund[/blue] for a [red]major repair[/red], isn’t this what insurance would be used for, if necessary?
Maybe a combination of homeowner’s insurance and a warranty policy (“appliance insurance”) would cover these events.December 10, 2003 at 3:11 pm #7679
Good points… I do put a home warranty on my properties to cover things like a/c, plumbing, water heater etc.December 10, 2003 at 4:00 pm #7680
Here in NJ, we have the highest property taxes in the nation.December 11, 2003 at 5:04 am #7681
The way I think of a NEHT property that is structured as a Tax Lease is a property I probably am intending on holding onto, for the long term, while the tenant beneficiaries are paying the mortgage off … another words a property that I am keeping to help in reaching my wealth building goals.
So the question on how to handle repairs, especially a major one, is very important.July 14, 2004 at 1:50 pm #7682
anonymousMemberQuote:Yes, that’s what the Contingency Fund is for…exactly that.
Remember that with the Eq. Hldg Trust Transfer, you can do anything you want. ?If you can conceive it, your can achieve it (made that one up my self…then sold it to Napoleon Hill).
Just remember that any time you promise someone a reduction in price, a rent credit, or a piece of the equity in the property…you have just transferred an equitable interest. ?This transfer of equity is all they need for a claim of “Equity” to thwart any eviction attempt and force you into a judicial foreclosure mode and probably an ejectment action and a Quiet Title. ?Don?t even think about it!
I have a question in regards to ” or a piece of the equity in the property…you have just transferred an equitable interest. ” in the above quote.
How or does this situation differ from “selling” all or a percentage of the existing equity, Potential appreciation or equity build-up when you are trying to increase your monthly cash flow thru “Income Layering”?
Would appreciate it if you could clarify this for me.
RickJuly 14, 2004 at 9:04 pm #7683
I think Bill was referring to doing that using a regular lease option w/o the protection of the trust.July 15, 2004 at 4:48 pm #7684
There are various ways to skin cats (assuming you’d need to have one skinned?gofferbid).
Let’s say I’m starting with $20,000 equity in a property that I own, and you come in as my seller-carry buyer and give me a $10,000 down payment.July 15, 2004 at 11:31 pm #7685
Great discussion about risks and how to eliminate or reduce them.
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