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| CRE Online > Real Estate Law > Bill Bronchick > Question and Answer |
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Question by Mary Phelps:
I am going to do a land contract with the current renter of my property. I currently hold a mortgage on the property with a bank. She will be required to get her own Finance in two years. She is putting $1000 down. Does the IRS still see this as rental and the $1000 is additional income? Do I give her a statement at the end of the year to show mortgage payments to me. Can I still deduct my mortgage payments to the bank? Answer By William Bronchick: The IRS looks at a land contract as an installment sale, the same as if you deeded the property and took back a note and mortgage. You should send her an IRS form 1098 (mortgage interest statement) before January 31st for the previous year. You can deduct the interest portion of your mortgage payments against the interest you collect. Disclaimer: The foregoing is not intended to be given as legal, financial or tax advice, but intended for instructional use only. If you require legal, financial or tax advice you should seek the assistance of a qualified professional.
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