Client states that they SOLD their 2nd home. (bought it 2 years ago for Mom to move into next door) … Mom had other ideas, changed mind and went West ….
Client has mortgage on this 2nd home and tells me that they sold it. BUT … they are holding the mortgage on it for the buyers. They have a contract written by lawyer states that the buyer has 3 years to obtain mortgage from bank and if they do not get one from the bank, they must move from the house and will not get any refund of monies paid.
The house is remaining in my client's name. The "Buyer" is paying a monthly amount on the house which is the amount of the mortgage payment that my client has plus interest plus escrow amount to pay the real estate taxes.
MY QUESTION is ….. This house is NOT considered sold is it when it is remaining in my client's name??? But do they have to claim the payments received as rental income ??? It isn't rental property either … it is more like a rent to own house that the buyer may or may not actually get to buy….
Do I just maybe CLAIM INTEREST INCOME only ????? The principal part of the payment from the "Buyer" equals the monthly mortgage payment that my client "the seller" pays.
What are your thoughts on this ??????
If they would have simply sold it and been done with it …. There would have been NO gain or loss … they just wanted out and are selling for the same price they bought it for. But unfortunately …. This couple couldn't get a loan so this is what they ended up with.
I do not see this as a sale because the property is NOT changed to new owner on the deed. And if It was a sale … what would happen 3 years from now when they still didn't get a loan and they had to leave the house.
Client has mortgage on this 2nd home and tells me that they sold it. BUT … they are holding the mortgage on it for the buyers. They have a contract written by lawyer states that the buyer has 3 years to obtain mortgage from bank and if they do not get one from the bank, they must move from the house and will not get any refund of monies paid.
The house is remaining in my client's name. The "Buyer" is paying a monthly amount on the house which is the amount of the mortgage payment that my client has plus interest plus escrow amount to pay the real estate taxes.
MY QUESTION is ….. This house is NOT considered sold is it when it is remaining in my client's name??? But do they have to claim the payments received as rental income ??? It isn't rental property either … it is more like a rent to own house that the buyer may or may not actually get to buy….
Do I just maybe CLAIM INTEREST INCOME only ????? The principal part of the payment from the "Buyer" equals the monthly mortgage payment that my client "the seller" pays.
What are your thoughts on this ??????
If they would have simply sold it and been done with it …. There would have been NO gain or loss … they just wanted out and are selling for the same price they bought it for. But unfortunately …. This couple couldn't get a loan so this is what they ended up with.
I do not see this as a sale because the property is NOT changed to new owner on the deed. And if It was a sale … what would happen 3 years from now when they still didn't get a loan and they had to leave the house.
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