Home seller holding note/ tax question
Mike rock
financing available" or "owner will hold note", which essentially
means the owner is the bank. I have 2 questions regarding the seller
and buyer:
For the buyer, can he/she still report interest paid on the mortgage
when filing taxes?
For the owner, does he/she have to report the interest income received
from the buyer?
Also I'm assuming this agreement is written up by the lawyers the same
as if this was a bank?
Douglas Johnson
>I have seen several homes for sale in which the listing says " owner
>financing available" or "owner will hold note", which essentially
>means the owner is the bank. I have 2 questions regarding the seller
>and buyer:
>
>For the buyer, can he/she still report interest paid on the mortgage
>when filing taxes?
Yes.
>For the owner, does he/she have to report the interest income received
>from the buyer?
Yes.
>Also I'm assuming this agreement is written up by the lawyers the same
>as if this was a bank?
You need to make sure of it. Get your own lawyer. With a bank involved, the
paper work is pretty standard. Without that, you need to make sure all your
bases are covered. Depending on local practice, this will include appraisals,
inspections, title search or insurance, recording of deeds and notes...
-- Doug
Don
> I have seen several homes for sale in which the listing says " owner
> financing available" or "owner will hold note", which essentially
> means the owner is the bank. I have 2 questions regarding the seller
> and buyer:
To avoid future headaches, be sure the contract includes a substantial
late-payment penalty.
If the buyer defaults, you want to be sure of getting the property
back. So, when you see a lawyer, you should understand what happens in
your area in that case. Also, find out what will happen if the buyer
not only defaults but also declares bankruptcy. You need assurance you
will get the entire property back even if there are other creditors.
Otherwise it might not be worth the risk.
Douglas Johnson
>I have seen several homes for sale in which the listing says " owner
>financing available" or "owner will hold note", which essentially
>means the owner is the bank. I have 2 questions regarding the seller
>and buyer:
>
>For the buyer, can he/she still report interest paid on the mortgage
>when filing taxes?
Yes.
>For the owner, does he/she have to report the interest income received
>from the buyer?
Yes.
>Also I'm assuming this agreement is written up by the lawyers the same
>as if this was a bank?
You need to make sure of it. Get your own lawyer. With a bank involved, the
Douglas Johnson
>I have seen several homes for sale in which the listing says " owner
>financing available" or "owner will hold note", which essentially
>means the owner is the bank. I have 2 questions regarding the seller
>and buyer:
>
>For the buyer, can he/she still report interest paid on the mortgage
>when filing taxes?
Yes.
>For the owner, does he/she have to report the interest income received
>from the buyer?
Yes.
>Also I'm assuming this agreement is written up by the lawyers the same
>as if this was a bank?
You need to make sure of it. Get your own lawyer. With a bank involved, the