My mother has a rental home valued at roughly $75K, with $15K owed on the loan. It was once her primary residence, but she now rents it - after getting married. My mother would like to give the home to me and my 2 brothers (mother and Home are in Mississippi - me and 1 brother=Indiana, other brother=Wisconsin). We will then invest approx $5-$10K in the home, to prepare it to be sold. We expect to break-even on the repair investments, simply to get it in a condition to sale.
My 2 brothers and I will need a loan in order to pay it off, and have enough money for repairs and to float it through 2007. I will be the only name on the loan, as my brothers do not have the credit and/or do not wish to tie themselves down with the loan. Though, they will contribute 1/3 of the note - which shouldn't total more than $300/month. Once sold, my brothers and I will share the profit equally (minus any fees I absorb through the process) - as we invest it. Ultimately, the cash will stay available, in case my mother ever needs it.
I am prequalified for a loan up to $40K. Though, I do not know how to structure the sale, in order to limit ourselves from a tax perspective, with a future sale pending. We need to complete the Sales ASAP - preferable by EOY. The current renters will vacate in March. We will then kick-off repairs, and expect it to take 6 months to sale.
With 2006 nearing an end, how can we structure the sale to limit ourselves from future capital gains, while maximizing profits? Can my mother gift equity in 2006 as we prepare a bill of sale, and then gift again in 2007, as we complete the transaction (from mother to sons) in early January? Do we need to form an LLC? If so, how is the LLC viewed from a bank's perspective, regarding the purchase, and would I need to register the Indiana LLC in MS?
What's my best approach? Any advice would be greatly appreciated!
Thanks!
My 2 brothers and I will need a loan in order to pay it off, and have enough money for repairs and to float it through 2007. I will be the only name on the loan, as my brothers do not have the credit and/or do not wish to tie themselves down with the loan. Though, they will contribute 1/3 of the note - which shouldn't total more than $300/month. Once sold, my brothers and I will share the profit equally (minus any fees I absorb through the process) - as we invest it. Ultimately, the cash will stay available, in case my mother ever needs it.
I am prequalified for a loan up to $40K. Though, I do not know how to structure the sale, in order to limit ourselves from a tax perspective, with a future sale pending. We need to complete the Sales ASAP - preferable by EOY. The current renters will vacate in March. We will then kick-off repairs, and expect it to take 6 months to sale.
With 2006 nearing an end, how can we structure the sale to limit ourselves from future capital gains, while maximizing profits? Can my mother gift equity in 2006 as we prepare a bill of sale, and then gift again in 2007, as we complete the transaction (from mother to sons) in early January? Do we need to form an LLC? If so, how is the LLC viewed from a bank's perspective, regarding the purchase, and would I need to register the Indiana LLC in MS?
What's my best approach? Any advice would be greatly appreciated!
Thanks!
