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Old 06-27-2012, 04:19 PM
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Exclamation Question about an amended return

I am filling out a Income Tax Amendment for for someone and I have a question. On the original return, the interest paid on a seller financed mortgage due to the fact that they did not have the identification number to include on the original return. Where on an amendment would this information go?



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Old 06-27-2012, 11:55 PM
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“On the original return, the interest paid on a seller financed mortgage due to the fact that they did not have the identification number to include on the original return. Where on an amendment would this information go?”----> It is deductible on Sch A of 1040 just as if you were making payments to a traditional lender. ALSO homeowners have been able to deduct points paid by the seller. This deduction previously was reserved only for points actually paid by the buyer The main difference is that the seller may not provide monthly statements to you, and also may not provide you a 1099 after the end of the year to show you how much interest you've paid. So it's up to you to keep records and do caculations. Keep cancelled checks and/or bank statements so you can prove the payments you've made. Also, if it's an amortized loan, you're going to have to figure out how much of your payment has gone toward interest. A contract for deed doesn't take a seller's name off the mortgage loan, and the seller is responsible for ensuing that his lender receives payments by the due dates. However, contracts for deeds are recognized as a home sale by the IRS. Upon completion of the transaction, tax benefits associated with owning the property transfer from the seller to the buyer. No longer is the seller able to deduct the amount paid in mortgage interest, PMI or property taxes. At the end of the year, sellers must provide buyers with tax form 1098, which indicates the amount of interest and other mortgage-related costs paid by the buyer. The buyer then writes off these expenses on his tax return;according to IRS guidelines, the loan must be secured by the property. So if the proper deed of trust is not recorded, it may not be legal for you to claim the interest deduction.


Last edited by Wnhough : 06-28-2012 at 03:13 AM.


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