Tax implications of "subject to" transactions

[Steve Olson]

Hi All,

I listened to one of the more recent podcasts that talked about subject to deals.

Does anyone have experiences with the tax consequences here? I would imagine that the mortgage company will send the year end mortgage interest statement still to the individual on the note...

But you could potentially be claiming that interest write off as well. Wondering if the IRS would connect the dots there or if this is really even a problem at all...

Any input you have is appreciated!

[Kyle Hipp]

I have done this. The mortgage interest is deductible by the buyer however it is filed under "other interest" as the 1099 is not issued to you being that the seller still has financing in their name. Everything else is the same, being property taxes, and othe expenses are deductible and depreciation is taken according to purchase terms like normal.