If it's truly 'owner financing' where you actually get a loan w/terms, interest rate, etc. then the seller is being your bank.
The seller should supply you with an end-of-year interest statement, and you should be able to deduct that interest from you taxes. Of course, always seek professional advice on taxes.
The best way to find out about the ad, is to call it and ask.
I have owner financed a home if the deeds are filed correctly and the closing is done properly then the buyer of the property deducts from the taxes not the seller or note holder.
Also, keep in mind, that the owner of the note, just like mortgage companies and banks, can sell the note to a group of investors. This way the owner can buy and sell a property usually without any of their own funds.
Usually, if you see an ad with owner financing terms, it is at retail or better. Make sure you have an exit strategy in place. The seller knows that terms will sell faster than a conventional sale. Technically speaking, the seller may have a mortgage himself on the property and may write off the interest hepays off of his tax return. The seller should give the buyer a 1099 interest form stating the amout of interest the buyer has paid in that tax year. That amount is deductible for the buyer and is income to the seller.
[addsig]
Quote:
On 2003-09-05 14:53, TLHynicker wrote:
Quote:
The seller should give the buyer a 1099 interest form stating the amout of interest the buyer has paid in that tax year.
The seller should give the buyer a 1099???? Thought a 1099 is for an independent contractor's income.
Terry <IMG SRC="images/forum/smilies/icon_confused.gif">
<font size=-1>[ Edited by TLHynicker on Date 09/05/2003 ]</font>
Sorry, a slip of the finger. It's a 1098 mortgage interest form.
If you are receiving interest then you need to send a 1098 to whoever paid it to you. So, the buyer paying the owner financed interest in this case gets the 1098.
When you are the one paying something out, then you may have to send out a 1099. There are lots of 1099s. I'm too lazy to search it up right now but just look around and you should be able to find a list of all of the 1099. I think the 1099S is the one that a closing attorney would send the IRS to say that a seller received proceeds from a sale. A 1099 DIV is when dividends are paid to you, 1099INT is for interest. Then, the one you referred to for a contractor is just a miscellaneous one; 1099 MISC.
Someone may want to double check my figures here but I think those are correct and like I said, there are more. Anyone have a handy list?
Erick You have it correct. The other 1099's are used for very specialized uses. The main ones we use are the 1099-MISC, 1099-INT, 1099-S. You may also see a 1099-A if someone was relieved of a debt. I recommend every one consult a good tax professional who understands this business to be sure they are compliant.
Yes.
Technically you are the mortgagor, the seller will be the mortgagee. He's taking your note (= IOU / loan) instead of the cash.
Owner financing is great, usually less paperwork, quicker closing, etc.
So if I were to get into one of those properties, come tax time, that property doesnt reflect my books, just his.
Verne
I love owner financing!! Less headaches and no banks.....
td
If it's truly 'owner financing' where you actually get a loan w/terms, interest rate, etc. then the seller is being your bank.
The seller should supply you with an end-of-year interest statement, and you should be able to deduct that interest from you taxes. Of course, always seek professional advice on taxes.
The best way to find out about the ad, is to call it and ask.
Roger
I have owner financed a home if the deeds are filed correctly and the closing is done properly then the buyer of the property deducts from the taxes not the seller or note holder.
Also, keep in mind, that the owner of the note, just like mortgage companies and banks, can sell the note to a group of investors. This way the owner can buy and sell a property usually without any of their own funds.
Usually, if you see an ad with owner financing terms, it is at retail or better. Make sure you have an exit strategy in place. The seller knows that terms will sell faster than a conventional sale. Technically speaking, the seller may have a mortgage himself on the property and may write off the interest hepays off of his tax return. The seller should give the buyer a 1099 interest form stating the amout of interest the buyer has paid in that tax year. That amount is deductible for the buyer and is income to the seller.
[addsig]
Quote:
The seller should give the buyer a 1099 interest form stating the amout of interest the buyer has paid in that tax year.
The seller should give the buyer a 1099???? Thought a 1099 is for an independent contractor's income.
Terry [ Edited by TLHynicker on Date 09/05/2003 ]
Quote:
On 2003-09-05 14:53, TLHynicker wrote:
Quote:
The seller should give the buyer a 1099 interest form stating the amout of interest the buyer has paid in that tax year.
The seller should give the buyer a 1099???? Thought a 1099 is for an independent contractor's income.
Terry <IMG SRC="images/forum/smilies/icon_confused.gif">
<font size=-1>[ Edited by TLHynicker on Date 09/05/2003 ]</font>
Sorry, a slip of the finger. It's a 1098 mortgage interest form.
Thanks for pointing it out,
Shawn(OH)
If you are receiving interest then you need to send a 1098 to whoever paid it to you. So, the buyer paying the owner financed interest in this case gets the 1098.
When you are the one paying something out, then you may have to send out a 1099. There are lots of 1099s. I'm too lazy to search it up right now but just look around and you should be able to find a list of all of the 1099. I think the 1099S is the one that a closing attorney would send the IRS to say that a seller received proceeds from a sale. A 1099 DIV is when dividends are paid to you, 1099INT is for interest. Then, the one you referred to for a contractor is just a miscellaneous one; 1099 MISC.
Someone may want to double check my figures here but I think those are correct and like I said, there are more. Anyone have a handy list?
Erick You have it correct. The other 1099's are used for very specialized uses. The main ones we use are the 1099-MISC, 1099-INT, 1099-S. You may also see a 1099-A if someone was relieved of a debt. I recommend every one consult a good tax professional who understands this business to be sure they are compliant.