Using stock to buy home

[Jetta#2]

Washington DC

Looking to buy a home inside the beltway and need to know the best way to use stock as a buying tool and minimizing the capital gains burden
(1) Can I use it (transfer the name on the stock) along with cash as downpayment? If yes, who pays capital gains?
(2) How do you use the stock as leverage (in any way)?

Thanks for any advice. I need to know how all this works so that when a house opens up we can pounce.

[JETX]

Originally Posted by Jetta#2

Washington DC

Looking to buy a home inside the beltway and need to know the best way to use stock as a buying tool and minimizing the capital gains burden
(1) Can I use it (transfer the name on the stock) along with cash as downpayment? If yes, who pays capital gains?
(2) How do you use the stock as leverage (in any way)?

Thanks for any advice. I need to know how all this works so that when a house opens up we can pounce.

First, you would have to find a buyer who is willing to take your stock in trade. And that, in my opinion, is extremely unlikely.
Then, if you find that one in one thousand (or rarer), you can negotiate how to do it and have an attorney draft a contract.

[Jetta#2]

Why would finding that seller be so difficult? Particularly if it is a very stable stock (i.e. JNJ or PG)?

Secondly, IF we did, who would be responsible for the capital gains on it?

Thanks.

[JETX]

Originally Posted by Jetta#2

Why would finding that seller be so difficult? Particularly if it is a very stable stock (i.e. JNJ or PG)?

Simple..... the seller presumably plans on using the proceeds of the sale to purchase another property (as that is by far the most common reason for selling). Second, the seller very probably has a different 'investment plan' that would likely NOT include YOUR stock.
Third, if you were to find a seller willing to go with your scheme.... you would likely have to pay a large premium to get them to even go along.
And finally, ANYONE who would even consider selling with payment by stock certificates would be found mentally incompetent and the sale rescinded.

Secondly, IF we did, who would be responsible for the capital gains on it?

That would be a part of the negotiations.... and why you would NOT be able to do this at face value.
Example: Lets say you want to purchase my house for $400,000 in stock.
If a 25% capital gains 'penalty' to me, you would have to provide $500k in stock.... before we could even START to negotiate. Why would any seller want to 'eat' your tax obligation??

[Jetta#2]

Funny stuff. I heard an attorney do this when buying a home in Georgetown about 5 years ago and never before or since. Somehow it worked for him. Thus, if I understand the message through the sarcasm, I shouldn't bother, though I could conceivably (sp?) use the stock as loan collateral.