Re: Okay then . . . - Posted by William Bronchick
Posted by William Bronchick on June 19, 2000 at 10:50:31:
This area of law is a little more “gray,” but I have done it.
Similar to a “double-wrap” you can lease a property with an option to buy from an owner, then sell on a land contract. The only issue now becomes - who gets the tax deduction? In theory, the IRS would not agree that the owner (now a landlord) could depreciate a property which the buyer on your land contract is also taking deductions for the mortgage interest. Thus, either the owner of the property or your buyer, if audited, would have a deduction disallowed. However, there is one situation wherein this might work: if the seller had lived in the property recently and was still within the period in which he could claim it as his personal residence, then he would not be treating it as a rental and taking depreciation. Thus, in theory, the transaction would only work if it was short term, say two years.
As with any strategy involving tax implications, review this strategy with your CPA, accountant or other tax advisor before proceeding.