2nd Note Tax Question
I am holding a second note on a property I sold. What do I have to send to the buyer for her taxes? This is my first time I have ever done this. Can anyone help me? I am in New Mexico. Please help!
You have to send the buyer Form 1098 for their interest payments. See www.irs.gov for the form.
You might want to check with the IRS website (www.irs.gov), but I beleive that you can deduct the interest as long as you have proof of payment and you are the only one claiming the deduction for the property.
To deduct the interest you have to meet teh following conditions:
1) The house must be your principal residence or second home, and
2) The loan must be secured by the home, and
3) The home equity loan cannot exceed 100k or the equity in the home, whichever is less.
4) You must be the the legal or equitable owner of the mortgaged property.
Keep in mind HELOC interest is NOT deductible for AMT purposes.
I think #4 prevents you from getting the deduction based on your facts.
It would appear, in your situation, that the payments you are making for your father are a gift. If the total amount of these loan payments exceeds $12K during the year, then you must file a Gift Tax Return for the excess amount.
Consult your tax advisor for details.
It would appear, in your situation, that the payments you are making for your father are a gift. If the total amount of these loan payments exceeds $12K during the year, then you must file a Gift Tax Return for the excess amount.
Consult your tax advisor for details.
ctsee,
Gifts are not deductible unless made to a qualified charity.