All Cash Transactions
This section provides some useful information to make cash transactions a success.
This section provides some useful information to make cash transactions a success.
Though most buyers don't buy a home with all cash, anyone considering such a move may be wondering how it’s done. Because all cash buyers sidestep the time-consuming loan qualification process, the deal can close very quickly. The primary advantage of buying a home with cash is completely avoiding mortgage interest and mortgage insurance. Buyers also save money that would be spent on loan origination fees, required appraisal, some closing costs and various other charges imposed by the lender.
When we discuss cash we are refering to you having cash in the bank and using a check. A check, usually certified will leave a trail that you will need for your records for the IRS when you sell.
But what if you wish to use cash, cash? "A" you then must carry a large sum of cash. Are you a target for robbers? Do you have a body guard? "B" It is legal to carry cash, Cash is legal tender for all debts public and private.
What if you are stopped by the police? They decide to search for some reason, they locate the large sum of cash (average house cost 350,000 dollars USA) what do they do? From their perspective it is definitely suspicious. A large amount of cash can be seize ( 18 U.S.C. 924, 981 and 982 ) . You may have to go to court to have your money returned. While this is happening what happened to the transaction?
Note: the DOJ’s Asset Forfeiture Fund (AFF) which had a net balance of more than $1.5 billion dollars in 2018. By the way, the Treasury Department has its own asset forfeiture fund known as the Treasury Executive Office for Asset Forfeiture (TEOAF). It also has hundreds of millions of dollars.
Then the seller goes to the bank to deposit the money. A person is allowed to deposit as much money as they want (can). Large amounts involve the Bank Secrecy Act which is officially called the Currency and Foreign Transactions Reporting Act, started in 1970. They (the bank) then fill IRS Form 8300. This begins the process of Currency Transaction Reporting (CTR).
TIP: Take a look at other investments that are doing well, and determine if spending cash on a home is your best investment option. Depending upon mortgage rates and your investment opportunities it may benifit you to carry a mortgage, deduct the interest expense and reap the return on investment. Talk to your accountant.
