Can Trump be in legal trouble for getting loans on his properties by inflating the value of the property?
Asked by
JLeslie (
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February 3rd, 2023
from iPhone
I don’t understand it. My husband said on MSNBC today they were talking about Trump getting a mortgage, or maybe it was a line of credit, on a property that he bought for $5 million, but then Trump said it was worth $60 million.
Why does it matter at all what Trump said it was worth? Loan officers decide what risk to take, and usually they rely on appraisers. Appraisers have rules and laws they have to follow to estimate the value of a property, they can’t just write down any old number just because the owner likes the number.
I don’t see how Trump has any legal culpability, but I’m assuming I’m missing something, so I came to the collective to explain it to me.
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17 Answers
I THINK he inflated the price of his property and then when doing his taxes he declared a loss. I’m not sure of this.
Yup @chyna two sets of books !
Fraud both tax and bank / wire !
He’ll plead the “fifth” twenty thousand times. . . . “pleading the ‘fifth’ the is only for mobsters” Trump quote ! So so . . . . he must be a mobster !! In his own words.
It was his company, he was CEO (even while President of the USA) and he is culpable !
If that’s the case, it seems like the tax fraud is the real problem, not the loan.
There are always real estate experts that Trump can pay that will justify whatever value he puts on properties.
@JLeslie Defauding the IRS tends to be the worse kind of problem, but defrauding lenders is also a problem.
@Zaku But, how can he defraud the lenders. I can tell a bank my house is worth $2million, but the appraiser is still going to come up with $500,000.
His story could hold water. When we sold our house last year we wanted to get rid of it fast so we sold it to Home Vestors, that We Buy Ugly Houses place. We agreed to sell for $6,500, the property obviously worth well over that amount, but circumstances had us going that route. So, as far as legal trouble, he couldn’t get into trouble if that is in fact what happened. Is it what happened with Trump? I couldn’t care less.
@JLeslie Real estate appraisers use marketing data to their client’s advantage. They can justify their conclusions with trends as they see them. It’s their professional opinion. It’s not illegal to have an opinion. At least not yet. HA!
The price of real estate can go up significantly over time, just like it can go down. I bought my house for $130,000 a dozen years ago. Houses in the neighborhood are now selling for $300,000 – $500,000. If I sold now and asked $600,000 that is not a crime even though I would likely not get that price.
The issue here is that our tax laws are goofy. You can sell real estate and make a profit physically on it but then write it off as a loss on taxes if the circumstances are right. I know this because we did it with my M-i-L’s house after she died. The house was paid off…there was no mortgage. When we sold it there were several things that were needed to upgrade the house so we sold it well under market value…tens of thousands of dollars under what the “appraisal” was. Those tens of thousands of dollars were written off as the loss that we claimed on the taxes. It was all 100% legal.
Trying to tie what Trump valued it at for a loan to his taxes are trying to compare apples to oranges. The bank giving the loan does not do so solely on what the person getting the loan says things are worth. And if you got a home loan at the beginning of 2008, it is likely your home would not have been worth the same as at the end of 2010. Does that mean you defrauded someone because you claimed a value that didn’t maintain?
@seawulf575 Tying the property worth together for a loan and for taxes certainly can be fraud if wildly different numbers are used in the same year or within a sort amount of time.
If you buy a property for a song, the county appraiser still uses market value, not just what you paid for it.
@JLeslie My point is that it isn’t necessarily fraud. The bank loan and the taxes are two separate entities, requiring differing levels of evidence. It is likely he had to give a recent appraisal to the IRS to show that his claim of value was valid. The bank may have been more forgiving and been generous with their appraisal (since they would have done their own). Nothing says those two appraisals have to be the same. They might be the same, they might be close to the same or they may be wildly different.
If you want to find where something was done that was sketchy in these two instances, look at what the bank did to give him a loan. It is likely there was something sketchy there and it is possible that Trump was in on it…giving “gratuities” for making it happen or some other such thing. But to tie the IRS to the loan is odd. And even if Trump did that, the people at the bank were just as in on it. And if they didn’t lose money or anything then there really is no case.
@Tropical_Willie The IRS does not accept that when someone is claiming a loss, unless they are actually appraisers. I know first hand you have to file an appraisal with your taxes when you are claiming a loss on the sale of a property. Again, it is possible there was something sketchy done, but if a company creates two separate appraisals for the same property, that company is really at fault.
Banks make loans against property based on appraised value. That’s because they think they can get that much $ back if the borrower declares BK. If the value is inflated, the lender will lose if the borrower defaults. Banks that loan out to Trump should not expect to get all their money back.
Taxes are based on the value of the property. If the value is deflated, the govt will lose potential revenue. Falsely deflating property value is tax fraud.
So Trump is doing both for various properties.
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