Buy Duplex with Contract for Deed affects Depreciation?

Question

CFDs are business big in MN, for sellers. Avoid foreclosure if buyer defaults, makes sense.

Lets say I buy a duplex by signing a contract for deed. Without being on title though, can an investor (me) rent that duplex out and still claim depreciation? Obviously want tax free income from REI. Am new to creative financing realm and feeling confused :-/

Jeff Schemmel · Answer

@John Woodrich once again, thanks for a thorough answer.  always learn so much from you, man.  CD terms are really popular now, sellers tend to prefer those over price drops, and even come on market out of the gate with acceptable CD terms being mentioned.

John Woodrich · Answer

@Jeff Schemmel

When you buy on CD - the contract should be recorded with the county so although you are not listed as the "owner" on the county site - you have an agreement that you are the owner if you abide by the contract terms.  So although it isn't always public information a CD holder in many instances is treated as the owner of the property.  I have a 5 and 6 unit that I own on CD.

@Robert Dodd Buying on CD doesn't change your ability to claim depreciation.  You can depreciate it.

Jeff Schemmel · Answer

@John Woodrich I assume you need to be on title to have a claim on depreciation, correct?

Robert Dodd · Answer

@John Woodrich The explanation is very much appreciated. Thank you Sir!  Am thinking about adding language into a purchase agreement that discourages seller from adding more liens after closing.  That's the biggest downside I've heard about for this investing strategy.

@Jeff Schemmel Would be glad to hear about any multi family your brokerage has available to buy via contract for deed.

Buy Duplex with Contract for Deed affects Depreciation?

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