Builder Incentives - Taxable Income or Non-Taxable Income?

<p>The builder incentives won't be taxed because you end up buying something (house, upgrades, loans) at a cheaper price rather than receiving an inflow of cash.</p>

<p><a href="http://blog.davidmillions.com">My Own Millions Blog</a></p>
 
In a way the government is getting tax off these incentives. It is not through income tax but through property tax. If a buyer over pays for real estate to acquire personal property, they will be paying 1% of the incentive value per year for as long as they own the home through their property taxes. Of course, on the sales side, they will save on capital gains taxes at the time of sale because their basis is inflated.
 
<p>I think it is a good question to find out.</p>

<p>I asked a builder, who was offering $100K for upgrades, how the money is paid. The answer was the buyer would get a rebate of $100K at COE. Now my CPA would lower the basis of the house so the buyer do not have to pay income tax. It looks like a deferment of tax payment to me. Like IR said, you pay 1% every year on the inflated amount.</p>

<p>Does anyone know how the money is captured when builder pays for 2 years of HOA? I did not ask.. Will this be a taxable income to the buyer because the builder is writing off this incentive as cost to them?</p>

<p>I am lost now!</p>

<p> </p>
 
<p>So for those of us that are not buying houses for all cash (most of us), it seems like it would make more sense if we put the money towards closing. Or it doesn't matter what you put it into, since it will be just a rebate check at the end anyway which the sales person made me think differently?</p>

<p><a href="http://blog.davidmillions.com">My Own Millions Blog</a></p>
 
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