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Guess Who Wants to Pay Higher Taxes? - REO Investors

There was an interesting article in The Orlando Sentinel  this morning.  It seems we have a flaw in the system for properly recording the sales prices of foreclosures sold via auction at the courthouse.  The vast majority of these properties are purchased by investors with the intent of doing a quick re-hab and then "flipping" the property. Counties in Florida collect a "documentary stamp" tax based on the sales price of a piece of real property.  The tax is 70 cents per $100 in sales price.  Under our current system, a buyer at a courthouse foreclosure auction is given a bill of sale based on the winning bid, but is not required to present the bill of sale when reporting the sales price to the county for calculation of the documentary stamp tax.  It appears many investors are over-inflating the sales prices of the properties they purchase via these auctions. 
Why would they do such a thing?  Simple: Greed.  They are doing it for good ol' fashioned American greed.  These investors can do this legally (let's leave ethically out of it) and avoid a huge chunk of capital gains tax when the property is sold.  As an example:  Investor purchases a property at the auction for $100,000.  He ... more

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