Foreclosure Interest
I purchase a foreclosure in MD. Under the terms, interest is accrued from the date of auction until the property closes. This interest is paid to the previous lender and not my lender. Can I deduct this interest on my tax return? The lender does not send out a 1098 like my current lender would. Is this money lost?
Thanks
If you are in the business of buying and selling real estate, then you are an ACTIVE -- not passive -- investor and your business is an active income activity.
An active income activity can take a business expense for each of the items you mentioned.
Well, I am not in the "business" of buying and selling real estate. I have a full time day job. I intent to invest (only land) in real estate to profit; maybe 1 to 3 transaction a year. Are the cost I incure seraching for investment opportunity tax-deductible? Thanks.
Your proposed real estate activity is a business -- an active income business, even though you only plan to operate it part time.
Report your "business" income and expenses on Schedule C (1040) and Schedule SE (1040).
"guru" Robert T. Kiyosaki’s (of Rich Dad, Poor Dad series) wrote about this strategy extensively in his books. If you read it there, throw those books in the trashcan.
http://www.johntreed.com/Kiyosaki.html
peshe-
Glad to hear it!