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URL:  http://boards.fool.com/complicate-vacation-home-transaction-20276351.aspx

Subject:  complicate vacation home transaction Date:  2/5/2004  11:51 PM
Author:  HokeySon Number:  69261 of 121313

Hello, I posted the below on the buying a home forum and thought it might be beterr over here? Also after posting, I think I should add that the question is not whether to buy the home, it is whether to pay cash or set up the deal as outlined. any comments appreciated.

I am considering buying a vacation home using the folowing and am interested in any thoughts as to what I may have missed or comments on its advisability (numbers changed for ease of analysis):
background facts:
Price 100 k
liquid money to purchase 100k
no traditional mortage available (75 rural acres, with manufacured home)

Plan:
set up NV corp.
purchase 100 shares of corp at 1000 each.
NV corp makes loan to me securing purchas of home n amount of 100k
I pay 10% interest on loan to corp.

Results(?):
I can deduct 10k in interest from my personal taxes (assume 40% Tax made up of 31% fed and 8% state) = tax savings of 4000
corp gets 10k in income (assume 15% fed tax no state tax and no deductions -- trying to be conservative here) = taxes of 1500
net tax savings = 2500
8500 of my money now sitting in corp for its investment (but subject to some flavor of taxation at pay out from corp).

Alternative:
pay cash
10,000 taxed at 40% leaves 6,00 for investment each year.

Any thoughts? thanks. trying to get a handle on this to decidee what to do.


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