LO And Taxes
If you LO a property from seller and LO it to your buyer do you (investor) get any tax benefits? Does the owner get to write off all the interest on property? What if you are not collecting rent but still making a payment to owner - can you write off this loss?
"Does the owner get to write off all the interest on property?",
Yes, the Owner still gets to write off interest, rental, maintenance etc. Its just a rental to the govt. As far as the county is concerned, the original owner is still responsible for taxes and everything else.
Besides being lazy, i cant see why an owner would enter into this type of agreement.
In any case, you the investor do not get anything at all, until you complete the purchase via option.
If you are a property manager, then you could get write off based on business expenses. But you dont appear to be a PM.
I thought the option money received for a property does not get taxed that year but in the year the property gets sold/ refinanced?
I was just told "Option money is taxable income in the year that the funds are received since all of your lease/option documents clearly state that the option money is non-refundable. The options are reported on your tax return on Schedule D"
[ Edited by SKrei on Date 08/24/2009 ]