Is this legal

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D Test

New Member
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Florida
Hi,

I currently rent a home and approached the homeowner to ask about purchasing. He says the price is 450K, he also said he'll reduce the price to 400K if I agree to directly pay him 25K outside of closing. I am planning on financing through conventional financing, not through the homeowner.

I've never heard of this... I assume he is avoiding paying income tax on the 25K. Is this legal for me? If it is legal for me how would I protect myself?

Thanks in advance!
 
Hi,

I currently rent a home and approached the homeowner to ask about purchasing. He says the price is 450K, he also said he'll reduce the price to 400K if I agree to directly pay him 25K outside of closing. I am planning on financing through conventional financing, not through the homeowner.

I've never heard of this... I assume he is avoiding paying income tax on the 25K. Is this legal for me? If it is legal for me how would I protect myself?

Thanks in advance!

I wouldn't do it. While not expressly illegal in itself, if he engages in tax evasion by this split payment or tries to stiff someone else (like realtor fees or whatever) the IRS or wronged party may assume you were a party to it and go after you as an accessory. It could also end up screwing you on your own taxes later. I would strongly recommend you consult a local attorney before taking him up on the offer. It just screams out that he's involved in trying to stiff someone, and that red flag should not be ignored.
 
You protect yourself by never agreeing to do anything that appears illegal or doing something that you ask clarification of unknown, anonymous, internet entities.
 
I wouldn't do it. While not expressly illegal in itself, if he engages in tax evasion by this split payment or tries to stiff someone else (like realtor fees or whatever) the IRS or wronged party may assume you were a party to it and go after you as an accessory. It could also end up screwing you on your own taxes later. I would strongly recommend you consult a local attorney before taking him up on the offer. It just screams out that he's involved in trying to stiff someone, and that red flag should not be ignored.

I feel sure tax evasion is his reason, local attorney sounds reasonable. Thank you.
 
I feel sure tax evasion is his reason, local attorney sounds reasonable. Thank you.

As Mister said in The Color Purple, "Could be, could be not."

He might be a snitch for one of the many gubmint law enforcement agencies seeking to compromise unsuspecting, naive, trusting citizens.

If you say NO, you vaporize the threat.
 
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