taxes land contract

  • Thread starter Michael Giambri
  • Start date

M

Michael Giambri

How would you deal with this on your taxes?

My parents (using their credit) purchased a home for my stepbrother to live
in. My parents make the payments for the loan, insurance, and real estate
taxes. Then my stepbrother pays them back for this amount.

So what should my parents do on there tax returns.

Thanks for any information.
 
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T

Thomas Healy

How would you deal with this on your taxes?

My parents (using their credit) purchased a home for my stepbrother to live
in. My parents make the payments for the loan, insurance, and real estate
taxes. Then my stepbrother pays them back for this amount.

So what should my parents do on there tax returns.

Thanks for any information.
1. They own the property.
2. They are liable on the loan.
3. They paid the loan.
Therefore:. If they do not own any homes other than this one and the one
they live in, they can deduct the mortgage interest.

They can deduct the real estate tax in any event.

Finally, if the amount that SB pays them is fair market rent, they can treat
this as a rental on Schedule E, and take depreciation and other rental
expenses.
 
M

Michael Giambri

Thomas Healy said:
1. They own the property.
2. They are liable on the loan.
3. They paid the loan.
Therefore:. If they do not own any homes other than this one and the one
they live in, they can deduct the mortgage interest.

They can deduct the real estate tax in any event.

Finally, if the amount that SB pays them is fair market rent, they can treat
this as a rental on Schedule E, and take depreciation and other rental
expenses.
He owns three houses including this one. I think he would rather treat the
whole thing as a wash but he is worried that what he received from my SB is
income. Is this true?
 
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D

Duane Bozarth

Michael Giambri wrote:
....
He owns three houses including this one. I think he would rather treat the
whole thing as a wash but he is worried that what he received from my SB is
income. Is this true?
Strictly speaking, yes. If he's going to itemize and deduct any
expenses, he needs to treat it as was suggested as a rental property.
I'd suggest ask someone local w/ more details provided to ensure most
advantageous route.
 

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