Contract for Deed and Homeowners $250k/$500k Tax Avoidance - Posted by GregN
Posted by GregN on December 17, 1999 at 08:35:02:
I’ve run across an owner who liked my idea of lease purchasing his home, but he’s worried what would happen if I don’t exercise my option during the multi-year lease term b/c he owns his $300k home free and clear (very nice!).
I said ‘I think there is a way we can get around that’ and mentioned a contract for deed scenario (the whole idea of him ‘financing’ the sale of the home scared him).
I just want to make sure that a contract for deed is considered an immediate sale by the IRS, allowing him to avoid the tax consequences of ‘accidentally’ becoming an investment property. Is this the case?
Are there any tax related pitfalls for the seller if I don’t come up with the funds at the end of the contract for deed ‘balloon’? (Just trying to have some answers to possible questions.)
Thanks for the help.