Subject 2 Tax Question
In a subject 2 situation, how can I get the tax benefit ? If I have a seller deed his property into a land trust where I am the benificiary, how do I get the tax benefit if his name is still on the mortgage. As I understand it, I will receive a 1098 from his lender with his name on it. I know I have seen a post or two on this topic but I remember seeing several different answers. I would appreciate your expertise.
I am sure John Locke will answer this better, but the answer I have seen is it doesn't matter who owns the mortgage, it's who pays it. If you are paying the mortgage, it's your deduction.
So, if you sell it on a CFD, your buyer gets the deduction, since he is paying you and you're paying the original seller's mortgage.
BTW: if the seller claimed the deduction while you were making payments on the mortgage, that's tax fraud. So make sure your seller knows they cannot take the deduction.
Good luck
Peter
coaster,
Glad to meet you.
What are you planning on doing with the property if you purchase it using the Subject To Method?
John $Cash$ Locke
PS: Peter you did a good job in explaining it, I am interested in his exit strategy.[ Edited by JohnLocke on Date 08/29/2004 ]
Hello John.
Lease option for 12-18 months is the plan. To be able to deduct the interest, is their a problem if the 1098 that will be sent to me has his name on it if I plan on keeping the property for up to 18 months. Tnanks