What tax forms should I ask the seller of an apartment or investment property to provide for before purchasing

Question

I am looking for a way to validate expenses and income. Owner or Realtor generated P & L's and proformas are designed to help sell the property. I want to see CPA generated financials. Would this be the Schedule E?

Answer 1

good question

ask for the income tax form, schedule, or return relating to the property. Check the income reported to the rent roles they say they're receiving and calculate their actual vacancy rates. Also check the amounts of all management responsible expenses against what they say they're paying -- property taxes, insurance, maintenance, repairs, management fees, advertising, etc.

[The depreciation will change, so you can ignore it.]

{NB: if you are buying a legal entity rather than just the property, you become responsible for the accuracy and correctness of their tax returns. Which is why many property investors won't buy a legal entity.}

Also ask for the most recent property tax bill and any miscellaneous state/local tax returns that may be required -- such as sales taxes on coin operated laundry machines, etc.


GL

{PS: P J has a good point about fake returns.}

Answer 2

A copy of their tax return as filed with the IRS. Better yet make them provide you with a copy they have gotten from the IRS (about 5-10 dollars) because anyone can give you a tax return they finished 1/2 hour ago on their computer meaning nothing. Or a copy where someone other than they have prepared it, like one with an H&R Block logo, Lawyer's siggy and firm name etc.

ADDED
I think the poster is trying to determine the financials before a purchase but I could be wrong. That is what my anwer is based on.

ADDED

Sorry gab I just do not believe in doing your homework for you!! Have a nice day I will!

Answer 3

If you're purchasing property, you should use a real estate attorney (not just agent) who can protect you from shady deals.

Such an attorney will check to make sure there are no liens on the property and that the title is free and clear.

I've heard horror stories about people who crowed "hey, I got this property for 15% of its real value!" and then found out that they owed another 90% because of a lien. Suddenly, your deal turns into a money pit where you owe more than it's worth.

Real estate ain't Monopoly. Get an attorney.

Answer 4

Not sure what tax forms you need before the sale. The closing will take care of making sure the property taxes are paid and at the start of the new tax year you will get a tax form that shows the amount of the sale for your return.

Answer 5

Not unless a CPA generated the forms. Maybe the owner does his/her own taxes.

Answer 6

in many cases a lender will settle for broking contribution to ultimate expenditures you're able to desire to get prequalified and ask the lender lenders want shoppers to have a minimum of 20% of their own money at stake Many investor purchases will require extra advantageous than 20% down, as riskier without proprietor occupier Federal crime to lie on own loan application related to occupancy

Answer 7

the only thing that applies is, property tax, insure they are paid and up to date. All other tax related forms are Private in nature and need not be provided to you by the seller.

Answer 8

that's a little rough. i think he was just trying to be helpful