Posted by Ed Copp (OH) on February 01, 2001 at 19:02:39:
Yue you need to give your buyer a 1098.
The interest that she paid you is ordinary income, and the interest you paid to your underlying lender is an (your) expense agains the interest that you received.
If your income is bigger than your out go, here you are doing O.K. If not you need a new plan.
Tax question on Land Contract - Posted by Scott SC
Posted by Scott SC on February 01, 2001 at 14:39:33:
Hello everyone.
Last year I bought a house as an investment and ended up selling it on a Land Contract. I received a 1098 from the bank with interest paid last year.
How does this work with the LC? Am I supposed to send the buyer a 1098 showing the interest she paid me last year?
How exactly does this work when filing my taxes?
I know I have to show this as a sale hopefully using the cash based accounting method and installment sell method.
But I’m not sure how the interest fits into the equation. Can someone walk me thru this tax stuff.
Thanks
Re: Tax question on Land Contract - Posted by Dave T
Posted by Dave T on February 02, 2001 at 24:19:40:
Better consult a tax professional right away. You have already missed the deadline for providing your buyer a 1098. Your deadline for filing that same 1098 with the IRS is still ahead of you, February 28.
You should also check with the tax professional on the correct tax treatment for the property you sold. This sale (from the sketchy information you gave) does not appear to qualify for installment sale tax treatment. Instead, all of the profit on the sale of the property may be taxable in full as ordinary income. Even though you sold the property on an installment method, the installment sale tax treatment might not apply to your transaction.