Creating a living trust to buy a house?

[Shadowfax]

[quote=SK in CV]First, a corporation formed in a different state must register with the state of CA before doing business here. I suspect, though I’m not positive, that purchasing real property would qualify as “doing business”. A foreign corporation has to file similar documents with the secretary of state as domestic corps, identifying officers and an agent for service of process.

Second, who’s going to buy the corporation (an out of state corp at that) and assume potential liablities of that corporation, the tax and legal headaches that would go along with maintaining the corporation and even bigger headaches of liquidating it. And legally, that transfer would have to be reported to the county assessor by the beginning of May following the sale if not sooner.[/quote]

Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.

[SK in CV]

Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.

[SK in CV]

Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.

[SK in CV]

Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.

[SK in CV]

Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.

[SK in CV]

Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.

[Coronita]

[quote=SK in CV]Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.[/quote]

SK,

What are the “other ways”?

-Curious kitty.

[Coronita]

[quote=SK in CV]Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.[/quote]

SK,

What are the “other ways”?

-Curious kitty.

[Coronita]

[quote=SK in CV]Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.[/quote]

SK,

What are the “other ways”?

-Curious kitty.

[Coronita]

[quote=SK in CV]Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.[/quote]

SK,

What are the “other ways”?

-Curious kitty.

[Coronita]

[quote=SK in CV]Probably getting a bit off topic here, however…

[quote=Shadowfax]
Foreign corporations do have to register, but only if they are conducting business. owning a residence is not “doing business” in CA. In fact, many states provide that as an exception to what constitutes doing business. And most states require some documentation reporting who the directors or officers of a corporation (or members/managers for an LLC) are. These records are not always available via the internet, but can be obtained (for a small fee) by the public by requesting the records from the Secretary of State or some equivalent agency.

Buying the corporation (foreign or domestic) is not that big a deal if the only asset is the real property. But a better way might be to just have the entity sell the real property to the buyer, then dissolve the entity.[/quote]

I’ll take your word for it that owning a house (or a piece of vacant land for that matter) doesn’t qualify as “doing business”, and if we’re assuming that the property is a personal residence, we’ve got the imputed income issue of fair rent for the property. That would qualify as doing business, whether rent is actually being collected or not. If it’s a piece of rental property, same thing, collecting rent would be “doing business”.

Another issue is that corporations aren’t entitled to the personal residence tax exclusion ($250K for single, $500K for married), so any gain would be fully taxable at corporate rates. And for either rental property or personal residence (though inside a corporation, i’m not sure how it could be anything but rental property if someone is living in the house) a corporation would pay at full rates, there’s no lower tax for corporations for capital gains. That’s also a problem with selling the whole corporation. The buyers wouldn’t be entitled to adjust the basis of the asset upon sale. Doesn’t matter what they paid for the corporation stock, the gain would still be computed based on what the corporation paid for the property (adjusted for any depreciation, whether taken or not). Which is one of the many reasons that anyone with good advisors would ever buy a corporation whose only asset is a piece of property. There is just no upside and plenty of downside.

And we have the whole issue of the 3.5% california withholding on the gross sales price, when the property is sold. Can’t get around it if the seller is a foreign corporation, like you can if it’s the sale of a primary residence.

Conclusion is, that if the goal is protecting privacy on the purchase of a personal residence, a corporation is NOT the way to go. There may be a way to do it. But this isn’t it.[/quote]

SK,

What are the “other ways”?

-Curious kitty.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[SK in CV]

[quote=flu]

SK,

What are the “other ways”?

-Curious kitty.[/quote]

I said “may”. I’m thinking maybe the only foolproof way would be to pay all cash so there’s no problems with the lender. Set up a pretty standard grantor trust with a fictitious name, (ABC Trust) and name an attorney or someone else as the trustee for the recording of the purchase, so your name doesn’t show up anywhere on the records. Then after the purchase is recorded, substitute yourself as the trustee. I can’t think of any reason that wouldn’t work.

[Author]

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