L/O - Sellers Need Credit Check - How L/O Affect Personal Tax Returns?
When you try to acquire a property through Sandwhich Lease Purchase, should y present yourself to the Seller as the Buyer and honestly tell them that you intend to put a Tenant Buyer in place? In that case, when you fill out the application form for the Seller’s record, as she would need a credit check or reference, would it be yourself or your tenant buyer? I know that when you do the contract, it wld have to be between myself and the Seller and I’ll have a separate contract with my tenant buyer (making me the Seller/Landlord) but I’m just not sure about the application form.
Also, what happens if you become the Landlord, what effect would it have on your personal income tax return? Should I declare the rental income bec. For sure my tenants wld declare theirs with my name on it, right? Pls. Guide me here.
I've bought more than a few properties on L/O and have never had my credit checked. I just tell them that I'm an investor that buys a number of properties a month and I don't give out my credit report for each deal because of the negative effects that numerous credit checks can have on my credit. Never had anyone call me on it. In theory though it would be your credit that they would want because you are responsible for making the payments to them. If your T/B doesn't make a payment to you, you still have to make your payment to the seller.
Yes, I would disclose your intentions to sandwich or sub-lease. You might be in violation of your lease if you don't have the verbage in there with your intentions.
As far as taxes, consult your CPA or attorney. I don't give out tax advice. I leave that to the professionals.
Good Luck!
If you have good credit ----flaunt it. Get your own report once a year and show it to anyone who wants to see it. Just don't leave it with them. It releaves a lot of seller's fears.
You must represent yourself as an investor not a occupant of the proprety.
Briefly, you will be taxed on the difference between what you collect from your tenant and what you pay your landlord-that's income.
Most financial advisors will tell you to pull your credit every 6 months just to make sure no credit fraud. When you pull your own credit it is a passive pull and does not hurt your credit score.
Quote:When you try to acquire a property through Sandwhich Lease Purchase... I know that when you do the contract, it wld have to be between myself and the Seller and I’ll have a separate contract with my tenant buyer (making me the Seller/Landlord)
Also, what happens if you become the Landlord, what effect would it have on your personal income tax return? leistar,
If you are in the middle of a sandwich lease, you are the Master Tenant with the right to sublet the property.
You would report all your income and expenses on Schedule C and your self-employment taxes on Schedule SE.
Your landlord-seller reports income and expenses on Schedule E, while your tenant buyer just pays you rent with no tax benefits to be derived.
Thank you all for your replies and guidance. will take note once i started doing it.