Do land contracts qualify for $8000 tax credit?

From the definitions of who/what qualifies a purchaser/purchase for the highly touted $8000 tax credit, it appears that a change in title (to the buyer's name) is what constitutes the "qualifying event". Of course this assumes the prospective buyer also meets the other qualifying criteria of being a first time homeowner, not buying from a relative, et cetera.

If the change in title (ownership on deed) is the actual "qualifying event", then it would follow that a land contract or contract for deed would be a qualifying event. I have been unable to determine from www.federalhousingtaxcredit.com, the IRS's site, or any other sites/blogs whether this is actually the case. Does anyone know?

Edited: 06/26/2010 at 07:37AM

Herb V.

Real Estate Investor · Vicksburg, Michigan

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Icon_minipost Nov 10 '09, 09:14 AM

Anthony this may help. The buyer must attach a irs form 5405 and the Hud-1 and this:
Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations?

A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)
Herbster

Edited: 06/26/2010 at 10:28AM

Dustin Lyle

Real Estate Investor · Kentucky

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Icon_minipost Jan 01 '10, 09:05 AM

Seeing as that we have established that a land contract qualifies for the tax credit, What about the HUD-1? What I mean is, what if the sale is done person-to-person, Then recorded by the sales individual at the courthouse. There was no Hud-1 settlement statement because there was no title, escrow, or attorney used... Could the 2-party transaction use a Hud-1 statement and place 0's in the "soft cost" lines?

Edited: 06/26/2010 at 11:03AM

Kevin Kaczmarek

Real Estate Investor · Carmel, Indiana

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Icon_minipost Feb 25 '10, 06:14 AM

Dustin,

You can use your own HUD-1 and have the buyer and the seller sign off on it. You can download a pdf version on HUD's website, or email me. I have a PDF copy in our office here that we use daily.

Edited: 06/26/2010 at 11:49AM

Kevin Kaczmarek, Capital Blueprints, LLC
Telephone: 317-564-4820
317-564-4820 kevin@capitalblueprints.com www.capitalblueprints.com

Scott Nachatilo

Real Estate Investor · Oklahoma City, Oklahoma

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Icon_minipost Feb 28 '10, 04:45 AM

1) The allowable amount of the tax credit is based upon the sales price - it is 10% of the sales price to a max. of $8,000.

2) A land contract, or contract for deed as it's called in my state, is an allowable transaction...I've gotten five checks for my buyers from houses I've sold in the last year or so.

3) Make certain your buyer doesn't owe money to the IRS or they owe money to state for something like child support. Two of my buyers had their checks seized.

Edited: 06/26/2010 at 11:51AM

Bill Gulley

Real Estate Investor · Springfield, Missouri

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Icon_minipost Feb 28 '10, 05:29 AM

Hi, and be sure to send in your 1098s/99s to match up with a real estate sale transaction as claimed. Show the pro rations for taxes and insurance on your HUD, this will evidence the requirements mentioned above. Bill

Edited: 06/26/2010 at 11:51AM

Donald Rull

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Icon_minipost Apr 06 '10, 08:33 PM

I found this thread useful and wanted to share the direct link to the PDF HUD-1 from the HUD web site.

http://www.hud.gov/offices/adm/hudclips/forms/files/1.pdf

Also, would anyone have an example of exactly what needs to be filled out for a land contract. We have sold my parents house on a land contract and basically the only numbers we have are the sale price and the deposit paid by the buyers. There were basically no other fees except a recording fee which we just paid (it was next to nothing).

Edited: 06/26/2010 at 12:22PM