Broker May Help With Commercial Mortgage

Special to the Times

QUESTION: We want to buy a vacant commercial lot where we will build a convenience grocery store and a few other shops. Our purchase offer is contingent upon approval of our plans by the city and obtaining financing. The city has given their blessing and encouragement. However, we are having trouble getting mortgage financing. Any ideas?

ANSWER: There is currently a very severe credit crunch for commercial property loans. Most commercial property lenders such as banks, S&Ls; and insurance companies have stopped lending.

However, mortgage brokers can find mortgage money, but it is expensive. Work with an experienced broker for the loan you need. Try to negotiate a low or no prepayment penalty, so you can refinance when commercial property mortgage money becomes available on more favorable terms.

No Tax Break on Rental House Sale

Q: I own a rental house which I want to sell because I have moved away from the area and it is hard to manage from 175 miles away. My problem is if I sell I will have about $80,000 profit. Other than making a tax-deferred exchange, is there any way to avoid paying tax on my sale profit?

A: No. An IRC 1031 tax-deferred exchange is the only way to defer tax on the sale of investment property. You could make an installment sale, but that merely postpones the tax until you receive the profit payments from the buyer on your seller-financed mortgage.

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