@jlo90275 wrote:
@NCperson The buyer is not my current tenant. This unit that he wants to vacate is one of the units in the apartment building that we are selling in CA. He plans to move in that unit after close of escrow so that he can apply for owner-occupied loan. The $15,000 is the credit for relocation fee for the current tenant in that unit. However, the buyer does not want us to show in the counteroffer or closing statement that $15,000 is credit for relocation fee nor for repairs credit as we are selling the property as-is. He just wants us to us a generic term “credit of $15,000 to buyer” but we are not sure if it will cause us any issues with future potential IRS audit.
In that case my original answer is confirmed. For IRS purposes, the selling price is net of any credits. If you sell for $100,000, or for $115,000 with a give-back credit, the net price is still $100,000. Or, to explain it another way, if you listed the property for $100,000, and the buyer negotiated you down to $85,000; or if the buyer agreed to $100,000 but negotiated a $15,000 credit, either way your net sales price is $85,000. That's all the IRS cares about.)
This is mostly a way for the buyer to show a higher price on his mortgage application (if he needs one) or maybe just to keep the property values up in the neighborhood.
