Question For Locke & Any Other Sub2ers
I know these questions might get me a "check with an accountant" reply, but I am not really asking a tax question, it's more of a "who officially owns the property" question (from the mortgage company and the government perspective).
At years end, does the mortgage company send a 1098 to the seller, stating how much interest was paid on the home? I would think so. Does the seller use this as a deduction on his tax return?
Let's say the sellers are renting now, some states have a renters tax rebate, if they claim both, will that send up a flag?
Or, do you claim the interest paid? Or, more accurately, how can you claim the interest paid without a 1098?
I appreciate the input.
ferris83,
Glad to meet you.
No accountant required with your question.
First this is why I suggest using a Loan Servicing Company, if you sell using a Contract for Deed your buyer is entitled to the interest deduction on the property.
Since you make an address change to the LSC they recieve the 1098 from the lender. They in turn issue a 1098 or equivalent to your buyer so they can claim the interest deduction.
Once you have the Deed your seller cannot claim the interest deduction on the property because he is not making the payments any more.
John $Cash$ Locke
Mr. Locke,
Thanks for the reply, I have never even heard of a loan servicing company. Do you know any good ones I can research. I plan to do my investing in New Jersey.
Thank You,
Ferris83
PS: Are you planning on doing another sub2 course?
I would also be interested in the name of a reputable loan servicing company in New Jersey although I imagine that it really doesn't matter where the company is located unless there are specific state regulations. Thanks!
Sometimes they list under the heading "Escrow" company.
National is one, there are several others.
If you want to get into sub-to...
Get John $CASH$ Locke's course. When you buy it you get full access to his forum and can find TONS of Loan Servicing Co's by searching the archives; as well as any other subject relating to sub-to. Highly recomend this if you really want to do Sub-to.
Just a thought.
Sam