Return to the Buying and Selling Homes Forum | Post a Follow-Up

 o
Rent to own

Posted by cmarkj (My Page) on
Fri, May 24, 13 at 23:36

The market in my area is still very slow. I have moved out of my house and have it on the market. After 4 months, There have been several open houses, no individual showings and no offers. There are houses in my town in the same price range that are approaching 1 year on the market. I have been approached about someone wanting to rent to own my house.
One big hang up is that It is costing me $1000 per month for the mort/taxes/ins for this house, and they can only afford about $700 per month for rent. That means it will still cost me $300 per month to carry the house. It is better than $1000 per month.
My main question is, is there some kind of write-off or other tax issues with the $300 I still have to pay each month? I am assuming that I will be able to write-off the interest and taxes as usual, as well as being able to depriciate the house? also, is the $300 a month I have to pay that is not being covered by the rent a business loss?


Follow-Up Postings:

 o
RE: Rent to own

You need to talk to an accountant or an attorney before you consider doing this.

No, you can't write off the mortgage interest and taxes in the same way as you can when it is your personal, non-income-producing residence.

There are tax breaks for rental properties, but they are different and reclassifying it as rental property may lose you some other valuable tax breaks, like the one covering capitial gains on sale of a principal residence.

Your insurance will change, too, when it becomes a rental. Even broaching the subject with your insurance broker may trigger problems as many insurance companies will cancel the policy if the house sits vacant, and that may trigger issues with your mortgage holder as you are no doubt required to have loss insurance equal to value of the note.

It is possible (and legal) to "rent-to-own" but that is a complicated, and somewhat risky way, to sell your house. And your mortgage may become due in full, even if you aren't getting enough from the rental payments to cover the note.

State laws vary on the atypical ways of selling property.

Get advice before you do this.

If the propective purchasers can't meet your carrying costs, they will never be able to qualify for a mortgage on their own. You don't want to be a private lender in this case. Evicting simple tenants for non-payment is hard enough; dispossessing deliquent installment purchasers is exponentially more complex and expensive. The $300/mo you're losing on the carrying costs will seem like chicken feed.

Sorry!

L..


 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!


Return to the Buying and Selling Homes Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Please review our Rules of Play before posting.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.


Learn more about in-text links on this page here