Taxes/Accounting a Bond-For-Deed transaction
Hello,
I recently closed on a BFD deal and looking for direction on correctly setting up journal entries, to make it easy at tax time.
In a nutshell...
We hold a mortgage on the property with a principal of $150k, 4.25%, 30yr amort (liability)
The BFD sale price was $300k, with a $45 downpayment, $255k financed at 5.5%, 25yr amort, 3yr balloon (asset).
All transactions are run through an escrow agent, and we just collect the net difference monthly (~$325 or so). This is our first BFD deal; same for our bookkeeper.
We would be very greatful for any guidance on how to property treat the initial downpayment, and monthly transactions.
Thank you!
Kenny Boyd