A friend and I are buying a property together. My friend does not live in my state, so he sent me a cashier check for $40K payable to my name. The bank asked him for my social security number to make the check. I need to deposit the check in my account so that I can make a joint check to but the entire property.

  1. Is there any TAX consequence for me having that $40K (which is not mine) in my account. In April 2014, am I going to have any issues reporting the $40K coming in and out of my account?

  2. Can I keep the cashier check on my name, and just sign the back of the check to the owner of the property?

Any help will be appreciated...

  • 6
    I have never heard of people buying into investment property with others without proper legal and tax advice. You're going to be in trouble eventually, just because you're trying to save a couple of hundreds of dollars on a proper consultation. Really? – littleadv Sep 14 '13 at 3:25
  • Should I get the consultation from a CPA or a lawyer? I am not trying to save money, rather time, but I don't want to cut corners either. – Geo Sep 14 '13 at 14:46
  • 1
    I'd say you definitely should. – littleadv Sep 14 '13 at 20:40

"I am trying to buy a property between me and a friend" - You and a friend are buying a property together? No, the owner probably won't like a third party check. There are no tax consequences so long as you have a paper trail. Nothing to submit unless you are asked.

Your friend and you will show joint ownership of the property, just keep a copy of the check, the statement showing the deposit, and the check used to buy the property, along will all other docs you get at closing.

  • Thanks JoeTaxpayer. What type of paper trail do I need? I have the cashier check and the stub for the cashier check. Do I need anything else? – Geo Sep 14 '13 at 1:42
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    Showing the statement of your account, the deposit and subsequent withdrawal of twice the amount payable to the seller, and the closing documents from the purchase should be sufficient. This shows it's not 'income' to you nor is it a gift. – JTP - Apologise to Monica Sep 14 '13 at 2:21
  • Trying to account for all possible scenarios. If something happens and we don't close on the property. What process should I use to return the money to the originator? – Geo Sep 14 '13 at 2:37
  • 3
    @Geo write him a check. – littleadv Sep 14 '13 at 3:26

The bank asked for SSN to make a FinCEN report, not for taxes. Cashier's check is a cash transaction and is reportable. There are no direct tax consequences.


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