Collecting the $8,000 Tax Refund Used as a Down Payment

First, always seek competent legal counsel as well as tax advice from the creative professionals after making a copy of their malpractice insurance policy.

Over a number of years of involvement with real estate, tenants, buyers, and sellers, I have learned a number of helpful techniques that seemed to work for me whenever I was trying to resolve unique situations. C Corps are an essential tool. Trusts of all kinds are a key element for control of entities and assets, both real and personal.

In the matter of collecting the refund offered by the Federal Government to first-time homebuyers, I would not get involved for two reasons. The first being, that if I were selling to an individual who's only means of a down payment was a future promise of a refund from a governmental agency, I would be very leery of the deal as it is too thin.

Secondly, relying on the government to get anything straight is really betting on a long shot. In the past twelve months they have thrown $12,400,000,000,000.00 (yes, that is correct, twelve point four trillion dollars) of stolen-from-YOU tax dollars at a few fat cats in the name of saving you. They simply do not now, nor have they ever, had a clue about how economics and the free marketplace works. We have found the problem and it is the government.

If you still should desire to pursue the idea of collecting the federal refund from the buyer who is entitled to the refund, take the buyer to your CPA and have him, the CPA, prepare the homebuyer's amended tax return showing the balance of $8,000 owed to the buyer by the government. The CPA will instruct the buyer to fill out a form instructing the refunds to be sent to the CPA for payment. As you know, CPA firms, such as H&R Block, will advance the tax filer funds from H&R Block's provided H&R Block creates the tax return showing the refund, files the return, and gets the tax refunds sent directly to them.  H&R Block charges a lot of interest and fees for this service.

Your CPA can collect the funds for you after having the house buyer sign the necessary paperwork with the IRS and after reviewing the fact that the home buyer does in fact own you his tax refund of $8,000. For a small fee, the CPA gladly will help you with this transaction as it keeps you, a favored client happy, and brings him new business in the form of a new and happy home buyer/owner.

Good luck. Good hunting. And Keep It Simple and ALWAYS document EVERYTHING.