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ways landlords can report or not report an apartment buyout

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ways landlords can report or not report an apartment buyout

Postby breathe » Thu Jul 21, 2011 10:21 am

I live in a rent controlled apartment in NYC and am being bought-out by my landlord. I inherited the apartment by law from my aunt who held the lease there for over 40 years (I lived there with her for 9 of them). I am not on the lease. My concern is that the sum of the buyout might be greatly reduced by taxes which would make the value of the transaction questionable for me. I want to make sure that there is no 1099 issued because, from what I've read, many in the know believe the buyout can be claimed as a capital gain. Basically, I want to include terms to this effect in our settlement contract.

My main question is: what are ways that I should request that the landlord report this transaction to the IRS, in order to mitigate my tax burden, and is it necessary for them to report it at all?
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Postby TenantNet » Fri Jul 22, 2011 10:11 am

Rent control units don't have leases, so are you rent stabilized maybe? Or maybe there's no physical lease.

If there is a lease, then how did you "inherit" the unit without being put on the lease? Makes no sense. And if you are not listed a the prime tenant, how is it that the LL is buying you out?

As for taxes, you should best get advice from a tax attorney. There are tax consequences from buy-outs (and if you have a lawyer, see if the lawyer takes a percentage or just works on hours).

I don't know if you can claim the proceeds as a capital gain as you don't own the property. Best to talk with a tax attorney.
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Postby breathe » Fri Jul 22, 2011 12:51 pm

Thanks for this information.
I spoke with an accountant who says that it's considered a long term capital gain. The landlord must report it and, if they do so on a 1099B form (Vs an ordinary 1099), there will be no disputing from the IRS.

It's considered an "intangible" capital gain.

It's definitely rent controlled so there probably never was a lease, which explains why I can't find one. The intangible owned here, and being purchased by the landlord, is the legal right to occupy the apartment until death.
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Postby HellsKitchenManNyc » Fri Oct 19, 2012 6:20 pm

How can they report it? Do they have your SS#?
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Postby HellsKitchenManNyc » Fri Oct 19, 2012 6:21 pm

I meant the landlord or managing company. How would the IRS know you got that money w/o the SS#?
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Postby Emeraldstar » Fri Oct 19, 2012 7:42 pm

Hi All
I would think the LL filing their end of the deal would make transparent to whom it went. Gone are the days of a cash stuffed mattress. Bed bugs maybe but no $.
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Postby HellsKitchenManNyc » Fri Oct 19, 2012 8:20 pm

But how? I'm just curious b/c my LL made me an offer and I don't know if I want to take it b/c it won't be worth it after taxes. I don't want to scam the gov't I'd just like to make out ok after taxes.
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Postby TenantNet » Fri Oct 19, 2012 8:27 pm

Chances are the LL already has your SS# from when you moved in, or for back-up withholding of your sec. dep.

Chances are the offer the LL made is very low. You would do better with a tenant lawyer negotiating, but then the lawyer would take up to 1/3 of the amount. And then there would be taxes. So buy-outs are not always that lucrative.

And then where would you go? Are you willing to pay $3,000/mo for rent - common for many NYC units these days?

BTW, you put your address in for your AIM number. We removed it as the policy is for no identifiable information should be posted. But from the address, that is NOT Hell's Kitchen. You're east of HK.
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Postby HellsKitchenManNyc » Sat Oct 20, 2012 1:54 pm

No I never gave anyone w/the building my SS#.
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Postby Emeraldstar » Sat Oct 20, 2012 5:28 pm

Hi All
If an LL has security dep. in a proper bank acct a name can probably trigger links if a search was implimented. Think about it. We are computerized in almost every facet of life. I really don't think LL's have cash hidden to buy out tenants. They are going to buy out through their business. Then again many LL's are such crooks one can only guess.
As for a buy out I agree with TN. Not a tenant windfall.
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