Posted on: 05th Apr, 2010 11:02 pm
I'm rephrasing an earlier question that I asked because I don't think I was very clear. We sold our main home, 100% seller financed, and want to know what our tax filing options are. Can we pay the taxes on the mortgage interest income in the year of the actual sale (at closing), or do we have to pay year by year as we go along? The house is selling for $113,000 and the profit is $25,000.
I do not think you are any clearer.
You sold a house and prifit is $25,000. Are you asking if you pay taxes on the $25,000 profit?
You sold a primary home that is 100% seller financed. Are you the seller who is holding the mortgage, the financing? If that is the case, you report interest income on the mortgage you are holding every year.
Are you paying the seller who is holding a mortgage? IN that case you do not report interest income, the seller does. The seler is the one colelcting the interest.
You sold a house and prifit is $25,000. Are you asking if you pay taxes on the $25,000 profit?
You sold a primary home that is 100% seller financed. Are you the seller who is holding the mortgage, the financing? If that is the case, you report interest income on the mortgage you are holding every year.
Are you paying the seller who is holding a mortgage? IN that case you do not report interest income, the seller does. The seler is the one colelcting the interest.
an L-challenged day for john...happens to all of us, of course.
you're so right, john; to make sense of the original post is to be in league with this unfortunate soul. i don't fathom the depth of the question, either. but i believe that what john has laid out above will probably cover all the variables, and in the midst you'll find what you're looking for, stacicherry.
you're so right, john; to make sense of the original post is to be in league with this unfortunate soul. i don't fathom the depth of the question, either. but i believe that what john has laid out above will probably cover all the variables, and in the midst you'll find what you're looking for, stacicherry.
Thank you both very much. You have answered my question. As for the profit that will be made once the house is totally paid for by the buyer (approx. 5 years from now), at what point do we pay taxes on that amount - in the year of closing or year by year? Thank you again for your time and advise.
As far as I know, you would be liable to pay the taxes on it when you gain the profit. I would suggest you to contact a tax adviser and he will guide you in this regard.
You sold the house and you are holding the mortgage. If ownership transferred to the buyer, you sold the house now and report the profit now. If this is a house you used to live in as your primary residence, I doubt you will have to pay any taxes.
What state is the proeprty in? Is this an instalment land contract and you are holding the mortgage or did you actually seel the property and the deed transferred to the new owner and you are holding the mortgage?
What state is the proeprty in? Is this an instalment land contract and you are holding the mortgage or did you actually seel the property and the deed transferred to the new owner and you are holding the mortgage?
jasmine's suggestion that you speak with a tax advisor is a good one.