Real Estate Contract for Deed - Who claims on taxes?

Question

My wife and I want to purchase a property using a contract for deed (a.k.a Land Contract). My question is this: are we (the buyers) allowed to claim the full benefit on our taxes i.e., does it become our deduction or the sellers deduction?

Answer 1

The seller is still the one paying the taxes and the one with the mortgage.   There are no deductions for you, you are legally a renter until you close the deal.

Answer 2

Whoever is on title, gets to claim the tax exemption, for the property taxes.

It's that simple.

Whoever's name the mortgage is in (if there is one) is the only one that can claim mortgage interest deduction.

Answer 3

No.  A contract for deed purchase usually does include a loan, thus there is no interest to deduct from your taxes.  But on the other hand you are not subject to property taxes because a contract for deed doesn't transfer title until the contract is fulfilled.

Answer 4

most land contracts are not recorded in the court house so the seller will get the benefits from that. Now comes the mortgage interest question. Since the seller who is holding the mortgage probably will not report the interest to the IRS so that is why you only doe these contracts for 1 to 2 years max then get bank financing. Always pay by check only as you will need a paper trail  

Answer 5

If you are buying on a contract, you are the beneficial owner.  In my state, California, that is sufficient to get a homeowners tax exemption. I suggest you write into the contract who is required to pay and thus entitled to deduct the property taxes. Pay what it takes to have an attorney review the contract.  You will buy peace of mind if nothing else.