Investor / Wholesaler · Erie, PA · Member since 2015 · 120 posts · 18 votes
I'm about to enter into a 100% seller financed loan and I'm wondering how I need to handle everything to ensure I can still write off the interest on the mortgage note and take advantage of all the other tax deductions. Thoughts?
The short answer is to make sure you pay them. If you are paying the mortage payments on an existing mortgage on the property, and assuming your taxes and insurance are coming out of the escrow account associated with that mortgage, you should be able to deduct those items.
I would make sure that you have your attorney review the contract that you will enter into with the buyer, and also give a quick call to your tax advisor.
That would depend on your contract. Are they assuming the loan etc? Is it a wrap? Thee are a great deal of possibilities We need a lot more information. You have to include the interest received on Schedule B and if you are paying interest you will be able to deduct subject to itemizing on Schedule A.
Boca Raton, FL · Member since 2015 · 249 posts · 52 votes
9y
If you are audited and the seller did not privide you with a F1098 for mortgage interest paid, you need to provide to the auditor the HUD statement or other contract to purchase and the loan agreement between you and the seller, and proof of payment of mortgage from cancelled checks, or if electronic payments, your bank statements. Make sure you retain these documents and you should be fine. This is all assuming arm's length transaction.