Land Trust and owner financing

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Could someone please explain the emplicatioins of owning a house in a land trust and selling owner finance.

Owe $129k
Selling for $142K
monthly note $995
Charging $1,225
$4k down payment
we are selling on a ballon note due in two years.
What are the taxes on the monthly income and how due we get hit on the capital gains? (should we pay on the downpayment now or can we difer till the balacne is paid?
Thanks Sire

Comments(1)

  • DaveT9th June, 2003

    Let's assume that this is an investment property and not your personal residence.

    For tax purposes, the sale is an installment sale -- even though you appear to be selling on a Contract for Deed. The IRS has an installment sale form just for reporting this type of transaction.

    Downpayment, any principle payments, and any interest payments you receive are taxable in the year received. Depreciation recapture also comes into play.

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