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From / Date: |
Question / Answer: |
| 2768. |
Mark
TX
Age: 24
Sep 23, 2007
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Border crossings
If you want to cross an American border in the future, beware of which people you associate with or sit next to, what you publish in your real name and which books you carry with you... and probably more. :(
Submitted Link #1: http://www.washingtonpost.com/wp-dyn/content/artic...
...
However, for the most part, this does not apply to the average border crossing so I wouldn't worry too much about it.
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| 2767. |
Larry
Tucson, AZ
Age: 40
Sep 23, 2007
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Reply to Howard
Hi Howard. You didn't mention title insurance. If you didn't involve a title company at all, then you don't have it. As far as I know, it's legal to own property without it. That means you are open to challenges to your title. If you ever want to sell your house, that will be a red flag to an alert buyer. You will not be able to personally guarantee your title has been clear during the period you owned it. The real estate industry and most of the players in it like guarantees - a lot. You cannot offer one. That could affect the value of your house. No one has challenged your title, right? The buyer may worry that someone may be planning to. If the new owner is challenged based on something that happened when you owned the house and were not insured, the insurance likely will not cover the new owners situation.I didn't make up all these rules (I wouldn't work that hard), but I do play by them.
Anyone who takes the time to go to the recorders office to look up your deed will notice there is no mortgage recorded behind it. If they decide to check the market value of your house, which gets easier and easier as technology improves, they will know you have at least that amount of money. There is no way to hide that. The system won't let you.
In this legal system you have two choices if you are sued - hire a attorney to respond, or do nothing and risk a judgement in your absence. That's the way the game is played. The other rule is: It doesn't matter how nice you are, do you have enough money to make a lawyer smile?
This is the part where I start laughing, as someone probably worked really hard to think up the rules of this game. Whether you hire an attorney to respond or just wait it out, you will have to identify yourself to the court - LLC or no LLC. Like I said - someone worked really hard to make up these rules.
My challenge is to be as private as possible while managing money intelligently. There are lots of ways to be private. The next time I sell a house I could insist the buyer hand me cash and a contract, over my dining room table, in return for a new deed I wrote up last night. That way the money would not even touch the bank. I'm waiting for you to tell me you did this last week and it went really, REALLY well - right? Yes, I'm being smart-, but you have to admit the whole thing is funny. As long as I include the transaction on my tax return if there are capital gains, it's legal, right? It also leaves me open to potential problems. Kind of ironic, isn't it. If we do things the simple way, we could expose ourselves to a lot of complications - and vice versa.
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| 2766. |
Mark
Saint George, UT
Age: 47
Sep 22, 2007
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Mary & Tracphone
I'm not sure if you mean Tracphone (I don't know what trecephone is), I've used it some. It's best feature is that it provides service in areas that many services don't cover. The downside, for me, is that the phones are not very inspiring. I like a phone that has a camera, PDA and wifi. So I went to Walmart and bought a T-mobile cheapie a $100 prepaid card (which is is less than $100 there and gives a 15% bonus on minutes), took the SIM card out of it and put it in an unlocked T-Mobile Dash that I picked up on ebay. You could just as easily get an unlocked iphone and use it the same way and not get locked into a lousy plan with it. Prepaid cingular SIMs work just as well. I use my phone a moderate amount for business and texting and it costs me less than a regular contract phone.
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| 2762. |
Howard
65982
Age: 46
Sep 22, 2007
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LLc
Larry:
How would my name be on file with a title/escrow company?, when I:
1)Didn'nt deal with one,
2) paid cash,
3)Sent a deed with the name of the LLc directly to the County Recorder of Deeds
and had NO (THAT'S NONE,ZERO) problems with them recording it?
4) All bills etc. use a nominee and ghost address.
It makes no sense! So that hypothesis is shot down!
And as for worrying about someone suing the property OWNER, I'm not too concerned about that, (I'd personally be more worried about being struck by lightning)I am more concerned with someone suing me for something I'VE DONE PERSONALLY, so when the sharks.. I mean lawyers, do an asset check on me;
I'm just a poor Joe!!! with NOTHING!!! LOL!!!
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| 2759. |
Mary
Duncansville, PA
Age: 48
Sep 22, 2007
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tracephone?
I wanted to known if anyone is familiar with Tracephone. What are the benefits, drawbacks, etc.
Your opinions would be appreciated
Thanks
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| 2758. |
Larry
Tucson, AZ
Age: 40
Sep 22, 2007
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Quitclaim deeds?
John, title insurance is at the heart of owning real estate. It insures that your title is free of anyone else claiming they own it. When you sell real estate, you are really selling that free and clear title - that is, the title is free and clear of anyone else claiming they own it. Other claims will cloud the title. The way buyers, lenders (etc) know the title is clear is they see proof of this insurance recorded with your property. The presence of this insurance tells anyone who looks at it the title company looked at the chain of title and found it to be sound. Therefore, they were comfortable insuring it against claims. The entire escrow process is really a long, cumbersome application for that title insurance.
A quitclaim deed is used by someone who wants to give up their interest in a property (I quit my claim on this property). It is the safest way to sell because the seller cannot be held responsible for anything. It is the riskiest way to buy - for the same reason. Let's say you want to buy a property from me. You don't care who else owns it or thinks they own it, you just don't want me to own it after you pay me. I would use a quitclaim to give up my interest. It is a very weak way to own real estate. It does not insure against claims from others. The most common use for it is to separate property in a divorce. I'm not sure you could get title insurance for that type of deed. If you didn't have title insurance, no one would want to buy the property from you (except at a very low price - because they are expecting challenges). The only way that works, in my opinion, is if you want to live there forever. Even then, it may be harder to pass it to your loved ones after you die. Even if you could, would the title company defend you from a claim? If you bought property by quitclaim, it is likely your title will be challeged by family members of the seller at some point. They will find you when the seller dies and they want to inherit the property you bought from him. Title insurance is your attorney, at no extra charge, in a situation like that. The job here has two parts, keep your name out of it and protect your money.
I have considered starting a corporation or other business strictly as a place to put money from real estate sales. I decided not to do that primarily because money that finds it's way into a business must be used in the best interest of the business, which is a very different use from where the money would go to pay my living expenses. In other words, it would not work to use money labeled as income for Curley Cows LLC to buy my groceries.
It is easy to buy property if you have the money. You legally can buy property by asking the current owner for a quitclaim. The very important "other" consideration is selling. That is the weak link in all of this. The question is, how do you get the money when you sell if no one knows who you are?
The money from the sale will go through the Federal Reserve wire system - very traceable. Searching this system is probably the fun part of being a detective. That system will identify you as the recipient. If you don't put the money in your personal account, then you will have to follow the rules of whatever account you put it in.
The LLC will make sure that someone, who knows your name but does not know where you live, cannot use the property databases to find where you live, because your name will not show up in the search results. It will not protect you (offer you liability protection) from people who know where you live.
I have found the field of privacy to be very interesting and challenging. It requires a lot of knowledge about an ever expanding list of topics. Here's to you JJL, and everyone who participates in this website. Let the adventure continue.
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| 2757. |
John
Virginia Beach, VA
Age: 39
Sep 21, 2007
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LLC for house
Larry,
What about using something like a Quit Claim Deed to purchase a house from someone without having to go through all of the normal channels. I've read a little on various forms of "denouncing ownership" of a house like this, but I don't know any more than that. Can any readers shed light on these types of alternative methods to convey property?
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| 2756. |
Larry
Tucson, AZ
Age: 40
Sep 21, 2007
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Re: #2755, LLC and Liability
Hi Howard. Yes, you certainly could tell people you are a renter. If there is a suit, it will be against the owner, as he is the one with verifiable assets (the house).That means the person who wants to sue "the owner" doesn't think he is targeting you, "the renter". If you own the LLC, the LLC owns the property, and you paid for the house with your own money , then he is targeting your money - even if he doesn't know who you are or your real relationship to the property - yet.
Your name will be on file with the title/escrow company. The name of that escrow company is public information. An investigator hired by an attorney, or anyone who knows how the system works, will easily find this.
It will be on file with the the escrow company, as a part of proving who you are in advance of receiving the money from a future sale. When you buy property, it is important to know how you will receive the proceeds when you sell.
Even if you get a tax ID for your LLC and create a bank account at the time of sale strictly to receive money from the sale, that account will connect your name with the LLC during escrow (when you still own the property and can still be sued) - very traceable. If an attorney is smart enough to record a suite against your property during escrow, it will likely stop the sale because it will cloud the title. There are at least two title searches done for every escrow. The first is to verify the sellers identity, the second is done near the end of the escrow process to be sure the title is still clear. If you are sued during your escrow as seller, you will still have to respond to the suit.
When I am trying to develop privacy stragegies, I always assume I am dealing with a very clever, borderline unscrupulous PI and attorney.
I have not figured out a way to keep my name totally out of the process of buying and selling a house - that is, buying a house with my own money all the way through receiving the money from the buyer when I sell.
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| 2755. |
Howard
65982
Age: 46
Sep 21, 2007
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LLc Reply
Larry,
Just because I live in a house owned by an LLc would not mean I own it.
Therefore, if someone knows I live in it, they do not know if I RENT or own it.
And since there is no name associated with the LLc, no one can prove otherwise.
So if someone wanted to sue ME,as far as their concerned, I do not own the house, I RENT it.
(Bills are in the name of a nominee.)
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| 2750. |
Larry
Tucson, AZ
Age: 40
Sep 21, 2007
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LLC and Liability Protection
Of course LLC stands for Limited Liability Company. If you use a single member LLC to hold real estate, the liability protection you have is because of the privacy it offers (your name is not recorded in the public records) - not because of the legal structure of the LLC itself. That means you are provided very little protection from someone who already knows who you are (a friend who visits).
Lets say Bob and Mark start an LLC. Bob and Mark are now members of the LLC. Lets say Bob defrauds a customer (or a visitor to the house owned by LLC trips and falls) and the LLC is sued. The court finds in favor of the customer. The LLC now owes the customer money.
The state laws that made the LLC a legitimate legal entity allow the customer/visitor to obtain a charging order from the court. The charging order is the tool that allows the LLC to protect its members.
The customer cannot just walk into the LLC's offices with his charging order and demand to be paid.
There are many games an LLC can play with a charging order that can make life very difficult on a customer (or lender)trying to collect on it. That is why any lender who loans you money to buy a house in an LLC will insist on a personal guarantee from you. This guarantee will have your name on it and eliminate your privacy. That is why it is best to pay cash for your house - no personal guarantee required.
The intent of the charging order procedures is to frustrate the customer/lender into settling for much less that the amount of the order, and to protect Mark from being liable to the customer for Bob's bad behavior.
In other words, the LLC with at least two members can protect itself quite well from a charging order, because charging order procedures exist to protect Mark from Bob's bad behavior. By the way, this two member LLC is considered a partnership by the IRS, so it needs a tax ID.If Bob were to form a single member LLC, he would not necessarily (not written in state law, so judge will decide if you are protected) be protected by a charging order because the law is not necessarily interested in protecting Bob from his own bad behavior. A judge will decide if Bob is worth protecting.
In summary, a single member LLC has privacy because it does not need a tax ID or state registration - other than the state where it was created. On the other hand, it does not have guaranteed charging order protection (liability protection). Remember, you own the house you bought free and clear because you paid with cash. Even though your name is private, your equity is public knowledge because no mortgage is recorded behind your deed at the county recorders office. Whatever your house is worth, everyone knows you have at least that amount available to sue for. Yes, they cannot reach your other assests, but you may have to give them your house.
For all of these reasons, I believe an LLC is best used for privacy only, unless you are actually running a business. For real estate owned in an LLC, you will have that privacy (they cannot figure out what your name is) only with people who do not know you, and those who attempt to do a real estate public record search to try to find where you live. LLC or not, you have no privacy from your neighbor who you just introduced yourself to. Hi - my name is...
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| 2746. |
paul
Minneapolis, MN
Age: 52
Sep 21, 2007
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LLC for property---disregarded entity
My experience may be more limited that Larry's, but I second his advice. And for those who are having trouble finding the right attorney/real estate agent, Larry mentions a phrase that you should use: As soon as you meet with your prospective attorney/real estate agent, you should mention in the first 60 seconds that you're thinking of using an LLC as a disregarded entity for a real estate purchase...ask if they have set that up for clients before. If you don't get the feeling they know exactly what you're talking about, find someone else. You may need a real estate agent who is not a new 'parttimer' but someone who has handled some commercial sales.
What we are doing with LLCs and real estate is actually becoming more and more common, but mostly for the purpose of protecting the owner from personal liability for accident claims on the property, etc. Also for the ability to sell the property by selling the LLC, saving you taxes on the real estate transaction....for large buildings, this saves owners thousands, even millions for a big factory. Privacy is a side benefit. Disregarded entity is the IRS language for: I'm using my LLC not as a corporation, but as an individual...for tax purposes, it's the same is personal income. Anybody doing LLC related work for you should know that that is, immediately.
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| 2745. |
Charles
Glen Ellyn, IL
Age: 39
Sep 20, 2007
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Renting a Home
Jack,
Just some affirmation that the techniques I first read about in HTBI 1st Edition are still valid.
I recently moved to a new area and needed to rent a house. To help my odds, I focused on homes that I knew had been for sale and vacant for more than six months. There were several, thanks to the recent housing market slump. I stuck to For Sale/Rent By Owner properties since agencies and managed properties are usually very inflexible.
After driving by several homes and selecting what we would like, I called the owner and arranged to meet to tour the house. We arranged for Sunday afternoon, right after church. My wife and one teenage son accompanied me dressed in their Sunday best. I was driving a freshly washed & waxed, rented Lincoln Towncar.
We met the owner, who was making some minor repairs to the house. My son volunteered to assist in moving some heavy bags, and while he did that we chatted and toured the house. I explained that we were moving into the neighborhood to help take care of my aging grandparents. While I wasn't looking for anything permanent, I was looking for something immediately and was prepared to pay first month, last month and security deposit immediately -- in cash.
To make a long story short, the deal was done in under two hours from meeting to contract and handshake. While I offered to provide references, my new landlord declined and said we "are the just type of people he is looking for". A credit check was never discussed.
The simple rule is, be polite and friendly; dress and drive sharp; bring cash.
Thanks,
Charles
...
A perfect execution!
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| 2744. |
Jerry
Charlestown, MA
Age: 54
Sep 20, 2007
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Question for Sharon
I read your very interesting post, 'How to Move', and I'm wondering what you're doing about your bank/checking/savings account(s).
I'm trying to achieve the same low profile that you are, but the change of address forms I get from my bank warn that because of the Patriot Act, if I use a cmra or PO box, they also need my physical address. I'm tempted to try to use my cmra box, but since everyone seems to check the USPS database these days, I'm afraid it will only draw unwanted attention to myself. . .Also my credit card company (which I only use to reserve hotels and rental cars, never to pay for anything) says that they will occasionally send mail to my physical address, even if I give them a mailing address.
...
The best solution, of course, is to obtain a true ghost address in the same city where you live.
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| 2741. |
Keith
Orlando, FL
Age: 50
Sep 20, 2007
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British police spy drone
From today's drudgereport.com:
British police spy drone:
Submitted Link #1: http://blog.wired.com/defense/2007/09/british-poli...
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| 2740. |
Larry
Tucson, AZ
Age: 40
Sep 20, 2007
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LLC and Federal Tax Exemption
The IRS treats a single member LLC as a disregarded entity. That means as long as your LLC has only one member (you) and you have no employees, the IRS does not care nor do they need to know it is an LLC. They disregard the fact that it is an LLC. That is where the term comes from.
The Section 121 "Exclusion of Gain From the Sale of Principal Residence" allows you to exclude up to $250,000 of gain from capital gains tax if you follow the rules of the section. Primarily, you must own the house as your principal residence for two years. Read the Section for all the details.You claim that exclusion by listing the sale on IRS Form 1040, Schedule D, Section 2. This is where all long term investments are listed. Any property owned for more than one year is considered long term. By definition, if you are following the rules of Section 121, any profit from the sale of your house is considered long term. There is nothing on Schedule D Part 2 that says "list your real estate sale here". To show the IRS you sold your property, write the property address (not the LLC name - they don't care about that)in one of those lines on scedule D part two, when you file your taxes, then do the math from there showing any profit. Most tax professionals don't know how to do this, they will simply tell you you don't have to list the sale. This is mostly a "do it yourself" way to file your taxes.
Your math must show your profit. If that profit is any amount up to $250,000, do your math so it shows the exact amount of your profit. Identify that exact amount as a Section 121 excluded amount. Look up the exact name of the exclusion you are using and write it next to the amount you are excluding.
The IRS says you do not have to do this. I do because I want the paper trail to present to them should they ever ask for it. The form does not explain any of this. As long as you write the exact dollor amount you sold the property for in column D (sales price) of that form and do the rest of the math accurately from there, you will be legal, accurate and more thorough than most people. Be sure the amount you write in column d (sales price) exactly matches the gross sales amount your 1099 shows. The 1099 is the form your attorney or escrow company uses to report the sale, so make sure you know what the gross sales amount shown on that form is.
I have not studied the process for claimimng the $500,000 exclusion, so I don't know enough yet to post anything about it. In this market, it will probably be a while before I need to study that part of it.
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| 2739. |
Josh
Maywood, NJ
Age: 29
Sep 20, 2007
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Who's watching your diet
...government routinely records the race of people pulled aside for extra screening as they enter the country, along with cursory answers given to U.S. border inspectors about their purpose in traveling.
The government stores the PNRs for years and typically includes destinations, phone and e-mail contact information, meal requests, special health requests, payment information and frequent-flier numbers.
"They want people to get permission to travel," Scannell said. "They already instituted it for leaving and entering the country and now they want to do it to visit your Aunt Patty in Cleveland."
Submitted Link #1: http://www.wired.com/politics/onlinerights/news/20...
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| 2738. |
Harry
Beverly Hills, CA
Age: 42
Sep 19, 2007
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LLC Loans
[Edited for length] Hi,
I have acquired a NM LLC! I need to refinance my California home. In your book you mentioned to only pay cash for a home, unfortunately I'm stuck, and I can't get out (yay housing crisis) and I need to refinance.
...
As I have often said, an LLC is only for property owned outright. It does not give you any privacy if a loan is involved.
... Also, you say you are "stuck." To get un-stuck, why not sell the house, take the loss, and rent something you can afford? And then never, ever, borrow money again!
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| 2737. |
Joel
Dallas, TX
Age: 53
Sep 19, 2007
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DJ and AARP
DJ - AARP is a marketing organization and your name and address are what they want. If you use one of there "services", you will be inundated with all sorts of advertising from them. Better to find what you need somewhere else.
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| 2736. |
Lewis
Frisco, TX
Age: 61
Sep 19, 2007
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Home title in LLCs vs capital gains exemption loss
I was listening to an asset protection specialist attorney last night, who explained that the 1997 tax reform act introduced the $250,000 capital gains exemption, per person, if the owner(s), a single or a married couple, had lived in their house for 2 of the 5 previous years prior to the house sale date. That attorney also cautioned that if the house is put into an entity, like an LLC or corporation, that $250,000 exemption vanishes. In the extreme case where people play the "move every two years" game in appreciating markets, it seems to highlight that using the LLC to hold title would be an extraordinary price to pay for anonymity. Any comments?
...
My attorney disagrees with your attorney. If you are still in doubt, by all means consult with your own attorney but make sure he can back up his opinion with references to the tax code. (I have spoken with attorneys so dismally ignorant that they think an S-corp is almost the same as an LLC!)
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| 2734. |
Doug
New York, NY
Age: 54
Sep 19, 2007
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AARP
Joining AARP is joining a Trade Union (AFL/CIO, Teamsters, etc.) for retired/soon-to-retire people. They use the funds/membership numbers for political action, (i.e. keep SS/Medicare benefits high as possible.) They will sell/share your name with other organizations that support their agenda and you WILL be targeted by numerous political solicitors and "AARP Members Only" advertising, for everything from adult diapers to auto insurance. If only garlic of a crucifix would keep them away . . .
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