Taxes and seller financing

8 Replies

Ive searched these forums and can't find a clear answer to my question but hopefully someone can help.

A family member of mine is closing on a seller financing deal tomorrow. The closing attorney has prorated  the taxes for seller and buyer for the 2015 tax bill. This is normal for a regular sale but my concern is that the seller is remaining in title. Shouldn't whoever is in title pay the property taxes?

By the way, my family member will be on the deed but not the title.

Thoughts, comments, etc?

What does the purchase agreement or Liam agreement say about pro-rations. Not sure what you mean by being on deed, but not title.
Make that "loan agreement."

If you buy on a wraparound mortgage or the contract for deed, where there is existing financing, or if it's sort of financing where there's no existing financing and a private first mortgage

  1. In real estate law, "equitable title" refers to a person's right to obtain full ownership of a property or property interest. This is often contrasted with or used in conjunction with the term "legal title." Legal title is the actual ownership of the land.

And I believe that the IRS looks at equitable title as ownership for the sake of taxation

See your CPA

@Steven Hamilton II

Is a great tax guy

Yes, the IRS looks at equitable title. If you have a financial interest in the property.

@Qulia Bryant You are mistaken, being "on title" and being "on the deed" are the same thing.  You need to define what you mean by "seller financing"....either a sale with an owner carried mortgage, a contract for deed, lease option, etc.

Originally posted by @Wayne Brooks :

@Qulia Bryant You are mistaken, being "on title" and being "on the deed" are the same thing.  You need to define what you mean by "seller financing"....either a sale with an owner carried mortgage, a contract for deed, lease option, etc.

 It's an owner carried mortgage with a balloon after 5 years. I was referring to deed of trust but I am clear now. The buyers will be on title and they are responsible for the property taxes. Thanks to everyone that has responded!

Old post but anyways, everything is negotiable. If the owner holds title than its only right that he pays the taxes. 

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