From: Fridley,Minnesota
Dear TaxMama,
I'm considering purchasing a home via the rent-to-own method, also known
as a land contract sale, I believe.
Can I legally claim the tax advantages of home ownership if this is spelled
out in the contract?
Thanks in advance!
Ray
Dear Ray,
I just know I'm going to get a lot of flack from the Pros on this, but...
Yes, you can.
In essence, even though you're not on title, you may as well be. (It's a
little complicated, tax-law-wise, but in the end, it works.)
However, I am not as concerned about your tax issue here, as I am about
your ultimate ownership issue.
Plaese see if there is another way to make the purchase, like the good,
old-fashioned mortgage.
With a land contract, the seller can take back the property at any time
if you ever get behind, without much trouble.
When you hold normal title, and have a mortgage, you have a much bigger
cushion if you ever fall behind.
I have seen and read about too many instances where the seller in a land
contract takes some arbitrary action, and the buyer loses the home.
Besides, as long as the property is still in the seller's name, if he gets
into financial trouble, his creditors can take your home! That's true, even
if you've made 300 of the 360 payments!
Please, Ray, check with an attorney and get the overview of all the pitfalls
of land contracts before you make this purchase. OK?
Best wishes,
Eva Rosenberg, MBA, EA
