Speare Valasakos
Active 1 year, 9 months agoForum Replies Created
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Hi Christiansen, I have been using Land Trust for 35+ years. Usually, the trust is set up as a disregarded entity as far as the IRS and the tax reporting flows through to the benificary of the trust. So the trust is not required to issue K-1’s. If there are multiply Beneficiaries, then each would report on their own tax returns. There have been times that the trustee has received a 1099 for income for the trust. in that instance if there is multiply beneficiaries, I had been advise for the trustee to issue subsequent 1099 to the beneficiaries base on their percentage, which again they would report on there own separate tax returns.
Hope this helps,
Speare V
While it is true the a homeowner is exempt for 3 transactions in 12 months it is for the Mortagage Originators License, the loan still has guidelines that is problemsome for seller financing. Read Below:
The Dodd-Frank Wall Street Reform and Consumer Protection Act (PL-111-203), signed into law July 21, 2010, allows up to three residential seller carrybacks a year ( a.k.a. seller financing, cash flow notes, seller-held mortgages, owner financing, etc.) without a mortgage originators license. This voids the HUD interpretation of the SAFE Mortgage Act, which did not allow ANY seller residential carrybacks without a license except if sold to close family.
The section of the Act reads:
?Mortgage originators?does not include?a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 3 properties in any 12-month period to purchasers of such properties, each of which is owned by such person, estate, or trust and serves as security for the loan, provided that such loan?
??(i) is not made by a person, estate, or trust that has constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of such person, estate, or trust;
??(ii) is fully amortizing;
??(iii) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan;
??(iv) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and
??(v) meets any other criteria the Board may prescribe;?I have used trust for over 20 years and beleive that they will be the best entity to use with seller financing.
Like stated on this form, the benificial interest in a trust is personal property and not subject to the law. The instalment note should be secured by the benificial interest in the trust. Then I record a performance deed of trust against the property if I am the seller.
Hope this helps,
Speare
