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is it legal to pay a smaller amount for a property and a similar amount for the furniture?

this would allow the buyer to have less real estate taxes on the purchase assessed.
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August 30 2013 - Frankfort
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Profile picture for Rob Froelich
Thanks Jarrid,
I just feels wrong and as my wife says, "slimey". I have set up an appointment with my tax person and a real estate lawyer. 
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August 30 2013
ok i'll just ignore the legal/ethical ? for a second...you wouldn't be saving much by doing this lets for instance say you pay 10,000 less for the home and 10,000 more for the furnishings... at a tax rate of 1% you "get out of" a whooping 100.00 in tax and when the buyer decides to sell the capital gain rate on the same 10,000 (5-20%) come out to 500-2000 tax. 

is this legal?  good question I would venture to say yes it is... your basicly frauding the government out of current and possibly future tax revenue.  I'd advise you both to seek the advice of an attorney and see what your options are!!
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August 30 2013
What a great plan! Except that the assessor will catch up to you, and having established a lower basis today may result in a potentially larger tax liability in the future.

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August 30 2013
Profile picture for wetdawgs
It does not sound legal or ethical.   Plus, the seller will have to pay gift taxes on the difference between the fair market value and the sales price (which could be substantial). 

The seller should get his/her lawyer involved in the deal.
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August 30 2013
Profile picture for Rob Froelich
It is a cash deal. The buyer is trying to keep the taxes from from being assessed at the$475k purchase price. The current tax bill is on a Taxable value of $266k with the assessed value $523. His thinking is that if he can get the house and property for $275k, the taxable/assessed value will be on the $275k and not the total sales price of $425k. the extra $200k would be for the furniture and then he would turn around and give the furniture to us, as he does not want it.
This just does not sound legal or ethical.
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August 30 2013
Profile picture for wetdawgs
Are you paying cash?
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August 30 2013
I think you will have a lender problem if you say the property and everything in it is selling for $200,000, as an example. Then try to rewrite the offer to be $100,000 for the house and $100,000 for the furniture. We sell most homes here fully furnished and we sell the furniture for $1 because the lenders don't want to see furniture being included in the loan for 30 years. If you wrote it for $100,000 and $100,000 then the lender will loan you $100,000 and you would have to pay the other $100,000 out of pocket.

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August 30 2013
 
Related Questions
is it legal to pay a smaller amount for a property and a similar amount for the furniture?
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Latest answer by Rob Froelich
August 30 2013 | 7 answers
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