Contract for deed

[Earl]

It is my understanding that a Contract for Deed or a Wraparound Mortgage are handled in the same manner.
As such the interest received from buyer is reported on Schedule B. Interest paid on the wraparound by the
seller can only be deducted as Investment Interest and deducted on Schedule A. If does not itemize then
no deduction for interest paid.

[taxxcpa]

I considered a wrapapround mortgage but some of the information I read indicated that you had to get the consent of the morgage holder, so I sold using a contract for sale.
I reported the interest I received on Schedule B and the interest I paid as investment interest expense.

I think it would be the same with a wrap around mortgage.

Later I paid off the mortgage I owed. The buyer had a poor credit record and paid as late as possible every month for years and had to skip three payments, but recently he paid an extra $125,000 on the mortgage which makes default inconceivable, so I gave him a warranty deed which replaced the contract for deed.