on land contract - Posted by pete agosto

Posted by Bill Gatten on November 16, 1998 at 21:57:32:

In my answer to the question concerning tax write-off on land contracts, I said “until land TRUSTS convey legal title.” I meant to say that tax deductions with land CONTRACTS might be difficult, or not possible at all…because they don’t convey legal title (only equitable); however land TRUSTS do, of course, provide tax deuctions to the benefiairy because the legal and equiablt title is conveyed to the trustee and tax benefits to the beneficiaries. Sorry (Sure screwed that up!).


on land contract - Posted by pete agosto

Posted by pete agosto on November 14, 1998 at 12:22:40:

I wanted to know if you can right off a home on a land contract? How much do you usually need to put down?

Re: on land contract - Posted by Bud Branstetter

Posted by Bud Branstetter on November 16, 1998 at 12:49:58:

The main thing the IRS would not like is if the deed holder and you were claim deductions on the same property. Typically, a lease longer than 3years or long term contract of sale allows deductions for ownership. If it is a true long term contract for deed you can also get a homeowners deduction on your property taxes.

Re: on land contract - Posted by Bill Gatten

Posted by Bill Gatten on November 14, 1998 at 15:06:55:


I’m not an accountant (but I play one on TV). However, my understanding is that since a land trust does not convey legal title (or… until it does) you would not be entitled to treat the property as a Qualified Residence under IRC #163. Note, however, that a land contract can be constructed as a contract “OF” sale rather than “for” sale, by creating an enforceable purchase agreement that declares an exact date, precise amount and terms of sale, in which event you could take the write-off (assuming the seller is willing to take the chance, relinquish its own write-off and subject him/herself to income taxation, etc.).

Check with an accountant on this one (then refer them to WD Belden Vs. the US Tax Court, & IRC Sec 1.163-1(b)).

Want the same benefits, without the question? See my post to Brad Crouch today.