Posted on: 25th May, 2010 07:51 am
My husband and I are looking at buying the place we are currently renting. We would like to know the pros and cons on buying out right versus having a mortage.
Currently the owner of the place will do owner fiancing. Now one thing we would like to know about is writing off on taxes. (Hope I stated that correctly.)
Would we be able to write anything off on our taxes with the owner financing it? And would we be able to write anything off if we bought it out right? Which would be the better way to go when it comes to saving us money in the long run.
Thank you,
Paula De
Currently the owner of the place will do owner fiancing. Now one thing we would like to know about is writing off on taxes. (Hope I stated that correctly.)
Would we be able to write anything off on our taxes with the owner financing it? And would we be able to write anything off if we bought it out right? Which would be the better way to go when it comes to saving us money in the long run.
Thank you,
Paula De
It's a simple answer.
Yes, you can deduct the interest you pay on the loan to the seller; and you can write off the interest if you buy it outright and have a normal mortgage. It really doesn't matter if the interest is paid to the seller of the home directly ( if seller financed ) or to a mortgage company ( if you buy it and obtain a new mortgage ).
The real question is, do you want to own a home ? If so, and you can afford a down payment and can qualify for a new mortgage, I would probably recommend you follow that route because the rates will likely be much, much lower than if the seller finances your purchase.
Yes, you can deduct the interest you pay on the loan to the seller; and you can write off the interest if you buy it outright and have a normal mortgage. It really doesn't matter if the interest is paid to the seller of the home directly ( if seller financed ) or to a mortgage company ( if you buy it and obtain a new mortgage ).
The real question is, do you want to own a home ? If so, and you can afford a down payment and can qualify for a new mortgage, I would probably recommend you follow that route because the rates will likely be much, much lower than if the seller finances your purchase.
hi gwynnavier,
you should opt for owner financing when you do not qualify for traditional loans or you cannot pay closing costs or when you need to get the home fast. however, if the seller finances you for a short term, then you would have to refinance the loan. in case, you default the loan, the deal will end and the seller will be able to take the down payment and the monthly installments that you've paid. as far as tax deductions are concerned, i would suggest you to speak to your tax adviser in this regard.
to know more about owner financing, check out the given page:
http://www.mortgagefit.com/owner-financing.html
thanks
you should opt for owner financing when you do not qualify for traditional loans or you cannot pay closing costs or when you need to get the home fast. however, if the seller finances you for a short term, then you would have to refinance the loan. in case, you default the loan, the deal will end and the seller will be able to take the down payment and the monthly installments that you've paid. as far as tax deductions are concerned, i would suggest you to speak to your tax adviser in this regard.
to know more about owner financing, check out the given page:
http://www.mortgagefit.com/owner-financing.html
thanks
Of course, one of the perceived benefits of owning a home (particularly when you have a mortgage) is the tax deductibility of certain of your expenses. Your most efficient way to go about this is to obtain the lowest interest rate possible - if that is zero because you're able to pay cash for the dwelling, then that's great. If you can find an institutional lender who'll provide a rate equal to or better than your seller, I believe you'll be better off with the institution.
Mortgage interest and real estate taxes are the two most common "write-offs" available to homeowners. As James noted, it's always worthwhile to speak with your tax advisor.
Mortgage interest and real estate taxes are the two most common "write-offs" available to homeowners. As James noted, it's always worthwhile to speak with your tax advisor.
