[SDEngineer]

[quote=knumb]

Real estate investing only makes good sense in an appreciating market, IMO. Otherwise the rent you get is not going to cover the cost of capital, the maintenance, and taxes. It’s sure not going to cover the hassle of dealing with renters.

[/quote]

This hasn’t been true in the past, and I don’t see any reason why it is true now.

When bubbles burst, they overshoot to the downside – there’s a window during this period when it is generally possible to find a property – especially at the low end – which will cash flow immediately as a rental.

Interestingly, in the ’96-’98 timeframe we saw lots of real estate investor activity (the buy-and-hold re investors, not the flippers of the bubble peak). This activity started well before it was apparent the bottom was in and appreciation had started up again.

[SDEngineer]

[quote=davelj][quote=sdduuuude]Can’t his mom gift $13K to 10 different people, then have each of those 10 other people gift to him or is it a $13K limit total for the gifter ?

[/quote]

It’s funny you mention that. I know a guy that’s part of a small group of wealthy folks, and the mothers and fathers each gift the maximum allowed to each of each family’s kids so that they, in effect, raise the maximum annual gift for each kid. There’s like 6 families involved with 15 kids, or something like that. So that each kid receives like $150K each year, instead of the miserly $12K (well, now $13K). I’m assuming it’s legal because the guy I know is pretty savvy about such things… but who knows…[/quote]

This is in fact completely legal. You are limited to 13K per gift recipient each year, but you can gift that amount to unlimited recipients, and there are no limitations as to how many gifts a given recipient can accept.

I think, though, that having all of those recipients then “regift” the money to a single recipient would trip some fraud flags in the IRS, since it’s a pretty transparent attempt to get around the tax-free gift limitation.

[SDEngineer]

[quote=davelj][quote=sdduuuude]Can’t his mom gift $13K to 10 different people, then have each of those 10 other people gift to him or is it a $13K limit total for the gifter ?

[/quote]

It’s funny you mention that. I know a guy that’s part of a small group of wealthy folks, and the mothers and fathers each gift the maximum allowed to each of each family’s kids so that they, in effect, raise the maximum annual gift for each kid. There’s like 6 families involved with 15 kids, or something like that. So that each kid receives like $150K each year, instead of the miserly $12K (well, now $13K). I’m assuming it’s legal because the guy I know is pretty savvy about such things… but who knows…[/quote]

This is in fact completely legal. You are limited to 13K per gift recipient each year, but you can gift that amount to unlimited recipients, and there are no limitations as to how many gifts a given recipient can accept.

I think, though, that having all of those recipients then “regift” the money to a single recipient would trip some fraud flags in the IRS, since it’s a pretty transparent attempt to get around the tax-free gift limitation.

[SDEngineer]

[quote=davelj][quote=sdduuuude]Can’t his mom gift $13K to 10 different people, then have each of those 10 other people gift to him or is it a $13K limit total for the gifter ?

[/quote]

It’s funny you mention that. I know a guy that’s part of a small group of wealthy folks, and the mothers and fathers each gift the maximum allowed to each of each family’s kids so that they, in effect, raise the maximum annual gift for each kid. There’s like 6 families involved with 15 kids, or something like that. So that each kid receives like $150K each year, instead of the miserly $12K (well, now $13K). I’m assuming it’s legal because the guy I know is pretty savvy about such things… but who knows…[/quote]

This is in fact completely legal. You are limited to 13K per gift recipient each year, but you can gift that amount to unlimited recipients, and there are no limitations as to how many gifts a given recipient can accept.

I think, though, that having all of those recipients then “regift” the money to a single recipient would trip some fraud flags in the IRS, since it’s a pretty transparent attempt to get around the tax-free gift limitation.

[SDEngineer]

[quote=davelj][quote=sdduuuude]Can’t his mom gift $13K to 10 different people, then have each of those 10 other people gift to him or is it a $13K limit total for the gifter ?

[/quote]

It’s funny you mention that. I know a guy that’s part of a small group of wealthy folks, and the mothers and fathers each gift the maximum allowed to each of each family’s kids so that they, in effect, raise the maximum annual gift for each kid. There’s like 6 families involved with 15 kids, or something like that. So that each kid receives like $150K each year, instead of the miserly $12K (well, now $13K). I’m assuming it’s legal because the guy I know is pretty savvy about such things… but who knows…[/quote]

This is in fact completely legal. You are limited to 13K per gift recipient each year, but you can gift that amount to unlimited recipients, and there are no limitations as to how many gifts a given recipient can accept.

I think, though, that having all of those recipients then “regift” the money to a single recipient would trip some fraud flags in the IRS, since it’s a pretty transparent attempt to get around the tax-free gift limitation.

[SDEngineer]

[quote=davelj][quote=sdduuuude]Can’t his mom gift $13K to 10 different people, then have each of those 10 other people gift to him or is it a $13K limit total for the gifter ?

[/quote]

It’s funny you mention that. I know a guy that’s part of a small group of wealthy folks, and the mothers and fathers each gift the maximum allowed to each of each family’s kids so that they, in effect, raise the maximum annual gift for each kid. There’s like 6 families involved with 15 kids, or something like that. So that each kid receives like $150K each year, instead of the miserly $12K (well, now $13K). I’m assuming it’s legal because the guy I know is pretty savvy about such things… but who knows…[/quote]

This is in fact completely legal. You are limited to 13K per gift recipient each year, but you can gift that amount to unlimited recipients, and there are no limitations as to how many gifts a given recipient can accept.

I think, though, that having all of those recipients then “regift” the money to a single recipient would trip some fraud flags in the IRS, since it’s a pretty transparent attempt to get around the tax-free gift limitation.

[SDEngineer]

[quote=strawberryfields]

Looking for something under 3000 sq ft, priced under $750k.

I have to believe that prices will come down to at least the $250/sq-ft range. How can a “starter home” be $500k? So that’s where my original question comes in – when, what and where? Did we already see the big dip and now it will be a long slow ride down? The market in this neighborhood has gone crazy again. It seems that there are plenty of people who believe that there are real deals to be had – and they’re buying. I’m not seeing the “deals” for the most part but maybe I’ve gotten unrealistic…

[/quote]

I agree with the others on this thread – Scripps still has a ways to fall. I think ppsf average of 250/sq ft is very likely in SR.

However, remember that Scripps Ranch is not “starter home” territory. It is an upscale community. You find typical “starter homes” in places like Mira Mesa, Linda Vista, and the counties (East, North, and South).

I’d be willing to bet that the vast majority of Scripps owners are on at least their second house (barring the condos/townhomes).

[SDEngineer]

[quote=strawberryfields]

Looking for something under 3000 sq ft, priced under $750k.

I have to believe that prices will come down to at least the $250/sq-ft range. How can a “starter home” be $500k? So that’s where my original question comes in – when, what and where? Did we already see the big dip and now it will be a long slow ride down? The market in this neighborhood has gone crazy again. It seems that there are plenty of people who believe that there are real deals to be had – and they’re buying. I’m not seeing the “deals” for the most part but maybe I’ve gotten unrealistic…

[/quote]

I agree with the others on this thread – Scripps still has a ways to fall. I think ppsf average of 250/sq ft is very likely in SR.

However, remember that Scripps Ranch is not “starter home” territory. It is an upscale community. You find typical “starter homes” in places like Mira Mesa, Linda Vista, and the counties (East, North, and South).

I’d be willing to bet that the vast majority of Scripps owners are on at least their second house (barring the condos/townhomes).

[SDEngineer]

[quote=strawberryfields]

Looking for something under 3000 sq ft, priced under $750k.

I have to believe that prices will come down to at least the $250/sq-ft range. How can a “starter home” be $500k? So that’s where my original question comes in – when, what and where? Did we already see the big dip and now it will be a long slow ride down? The market in this neighborhood has gone crazy again. It seems that there are plenty of people who believe that there are real deals to be had – and they’re buying. I’m not seeing the “deals” for the most part but maybe I’ve gotten unrealistic…

[/quote]

I agree with the others on this thread – Scripps still has a ways to fall. I think ppsf average of 250/sq ft is very likely in SR.

However, remember that Scripps Ranch is not “starter home” territory. It is an upscale community. You find typical “starter homes” in places like Mira Mesa, Linda Vista, and the counties (East, North, and South).

I’d be willing to bet that the vast majority of Scripps owners are on at least their second house (barring the condos/townhomes).

[SDEngineer]

[quote=strawberryfields]

Looking for something under 3000 sq ft, priced under $750k.

I have to believe that prices will come down to at least the $250/sq-ft range. How can a “starter home” be $500k? So that’s where my original question comes in – when, what and where? Did we already see the big dip and now it will be a long slow ride down? The market in this neighborhood has gone crazy again. It seems that there are plenty of people who believe that there are real deals to be had – and they’re buying. I’m not seeing the “deals” for the most part but maybe I’ve gotten unrealistic…

[/quote]

I agree with the others on this thread – Scripps still has a ways to fall. I think ppsf average of 250/sq ft is very likely in SR.

However, remember that Scripps Ranch is not “starter home” territory. It is an upscale community. You find typical “starter homes” in places like Mira Mesa, Linda Vista, and the counties (East, North, and South).

I’d be willing to bet that the vast majority of Scripps owners are on at least their second house (barring the condos/townhomes).

[SDEngineer]

[quote=strawberryfields]

Looking for something under 3000 sq ft, priced under $750k.

I have to believe that prices will come down to at least the $250/sq-ft range. How can a “starter home” be $500k? So that’s where my original question comes in – when, what and where? Did we already see the big dip and now it will be a long slow ride down? The market in this neighborhood has gone crazy again. It seems that there are plenty of people who believe that there are real deals to be had – and they’re buying. I’m not seeing the “deals” for the most part but maybe I’ve gotten unrealistic…

[/quote]

I agree with the others on this thread – Scripps still has a ways to fall. I think ppsf average of 250/sq ft is very likely in SR.

However, remember that Scripps Ranch is not “starter home” territory. It is an upscale community. You find typical “starter homes” in places like Mira Mesa, Linda Vista, and the counties (East, North, and South).

I’d be willing to bet that the vast majority of Scripps owners are on at least their second house (barring the condos/townhomes).

[SDEngineer]

[quote=jimmyle]I have several questions for a friend who has too much cash but low reported income. He is buying a house right now and suddenly needs to put $240K into his bank. He plans to give cash to his sister and brother and they write him a check as a gift.

1. Can his brother and sister give him a cash gift? what is the limit? what are the tax consequences?

2. Same question for nephews and nieces.

Thanks,

[/quote]

I can tell you that your friend had better have a really good explanation for the money no matter how he gets it into his account.

Large cash deposits are flagged by banks to both the IRS and the FBI. It won’t matter how the money gets in (small incremental deposits or large ones), nor will it matter whether he has enough relatives (unlikely) to re-gift him his own funds under the taxable gift limit (I believe 13K is the current limit).

Pretty much, he’s guaranteed both an audit and an investigation for money laundering. And since he’s committing tax fraud, the best he can hope are some pretty stiff fines (assuming that the cash is from under-the-table type work, and is not actually ill-gotten gains).

Edited to add:

Having read the reply above, I’m afraid his best course (assuming the sale was recent) is simply to take the tax hit and declare and deposit the money himself. Have him talk to a CPA to find out what his tax obligations are in this situation (it’s unusual, and I have no idea how the IRS would treat it). He’ll still get audited (that much cash movement is virtually guaranteed to draw an audit), and very well might draw the attention of the FBI, but he’ll be above board and legal, and as long as he pays the due taxes (whatever they happen to be), nothing bad will occur.

Again, if he attempts to use a gifting scheme to move that much money into his account and avoid taxes, he is committing tax fraud. He might wind up losing ALL of the cash to penalties and fines.

[SDEngineer]

[quote=jimmyle]I have several questions for a friend who has too much cash but low reported income. He is buying a house right now and suddenly needs to put $240K into his bank. He plans to give cash to his sister and brother and they write him a check as a gift.

1. Can his brother and sister give him a cash gift? what is the limit? what are the tax consequences?

2. Same question for nephews and nieces.

Thanks,

[/quote]

I can tell you that your friend had better have a really good explanation for the money no matter how he gets it into his account.

Large cash deposits are flagged by banks to both the IRS and the FBI. It won’t matter how the money gets in (small incremental deposits or large ones), nor will it matter whether he has enough relatives (unlikely) to re-gift him his own funds under the taxable gift limit (I believe 13K is the current limit).

Pretty much, he’s guaranteed both an audit and an investigation for money laundering. And since he’s committing tax fraud, the best he can hope are some pretty stiff fines (assuming that the cash is from under-the-table type work, and is not actually ill-gotten gains).

Edited to add:

Having read the reply above, I’m afraid his best course (assuming the sale was recent) is simply to take the tax hit and declare and deposit the money himself. Have him talk to a CPA to find out what his tax obligations are in this situation (it’s unusual, and I have no idea how the IRS would treat it). He’ll still get audited (that much cash movement is virtually guaranteed to draw an audit), and very well might draw the attention of the FBI, but he’ll be above board and legal, and as long as he pays the due taxes (whatever they happen to be), nothing bad will occur.

Again, if he attempts to use a gifting scheme to move that much money into his account and avoid taxes, he is committing tax fraud. He might wind up losing ALL of the cash to penalties and fines.

[SDEngineer]

[quote=jimmyle]I have several questions for a friend who has too much cash but low reported income. He is buying a house right now and suddenly needs to put $240K into his bank. He plans to give cash to his sister and brother and they write him a check as a gift.

1. Can his brother and sister give him a cash gift? what is the limit? what are the tax consequences?

2. Same question for nephews and nieces.

Thanks,

[/quote]

I can tell you that your friend had better have a really good explanation for the money no matter how he gets it into his account.

Large cash deposits are flagged by banks to both the IRS and the FBI. It won’t matter how the money gets in (small incremental deposits or large ones), nor will it matter whether he has enough relatives (unlikely) to re-gift him his own funds under the taxable gift limit (I believe 13K is the current limit).

Pretty much, he’s guaranteed both an audit and an investigation for money laundering. And since he’s committing tax fraud, the best he can hope are some pretty stiff fines (assuming that the cash is from under-the-table type work, and is not actually ill-gotten gains).

Edited to add:

Having read the reply above, I’m afraid his best course (assuming the sale was recent) is simply to take the tax hit and declare and deposit the money himself. Have him talk to a CPA to find out what his tax obligations are in this situation (it’s unusual, and I have no idea how the IRS would treat it). He’ll still get audited (that much cash movement is virtually guaranteed to draw an audit), and very well might draw the attention of the FBI, but he’ll be above board and legal, and as long as he pays the due taxes (whatever they happen to be), nothing bad will occur.

Again, if he attempts to use a gifting scheme to move that much money into his account and avoid taxes, he is committing tax fraud. He might wind up losing ALL of the cash to penalties and fines.

[SDEngineer]

[quote=jimmyle]I have several questions for a friend who has too much cash but low reported income. He is buying a house right now and suddenly needs to put $240K into his bank. He plans to give cash to his sister and brother and they write him a check as a gift.

1. Can his brother and sister give him a cash gift? what is the limit? what are the tax consequences?

2. Same question for nephews and nieces.

Thanks,

[/quote]

I can tell you that your friend had better have a really good explanation for the money no matter how he gets it into his account.

Large cash deposits are flagged by banks to both the IRS and the FBI. It won’t matter how the money gets in (small incremental deposits or large ones), nor will it matter whether he has enough relatives (unlikely) to re-gift him his own funds under the taxable gift limit (I believe 13K is the current limit).

Pretty much, he’s guaranteed both an audit and an investigation for money laundering. And since he’s committing tax fraud, the best he can hope are some pretty stiff fines (assuming that the cash is from under-the-table type work, and is not actually ill-gotten gains).

Edited to add:

Having read the reply above, I’m afraid his best course (assuming the sale was recent) is simply to take the tax hit and declare and deposit the money himself. Have him talk to a CPA to find out what his tax obligations are in this situation (it’s unusual, and I have no idea how the IRS would treat it). He’ll still get audited (that much cash movement is virtually guaranteed to draw an audit), and very well might draw the attention of the FBI, but he’ll be above board and legal, and as long as he pays the due taxes (whatever they happen to be), nothing bad will occur.

Again, if he attempts to use a gifting scheme to move that much money into his account and avoid taxes, he is committing tax fraud. He might wind up losing ALL of the cash to penalties and fines.

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