purves[at]jach.hawaii.edu wrote:
- quote -

Before I wised up and moved to Thailand, I lived and
practiced in Hawaii for nearly 40 years. During most of
that time, it was very common for people to buy their homes
on an "agreement of sale." The seller retained title and
the underlying mortgage and the buyer made payments to the
seller. These agreement typically expired in 5 years, at
which time the buyer would obtain his own mortgage and pay
off the seller. Agreements of sale were recorded just like
regular mortgages and protected the buyer from having a
dishonest seller sell the property again.

Anyway, because the sellers were not banks or otherwise in
the business of making loans, 1098s were not required.

Under current conditions, these agreements may no longer be
used but the rule on 1098s has not changed.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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Mike20878" <mrosen[at]gmail.com> wrote:

- quote -

This is wrong. A lender who is NOT in the business of
making loans is not required to issue a 1098. That's why
there is a separate line on Schedule A for seller financed
mortgages. With the lender also required to report the
interest on his Schedule C, the IRS has the necessary
information to match the two returns.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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Mike20878 wrote:

- quote -

If that private individual is not in the trade or business
of lending money, then the form is not required.

http://www.irs.gov/pub/irs-pdf/f1098.pdf

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Arcadefreaque wrote:

- quote -

IMHO (never had a mortgage from an individual, just
from a bank) the lender is supposed to provide you with
the same kind of statement (in fact, the same form) as
a bank would, and report the interest received from you
as income.

Aloha,

Maren
Palms, Etc.: Tropical Plant Seeds - Hand-made Jewelry -
Plants & Lilikoi
http://www.jach.hawaii.edu/~maren/palms_etc/

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"A.G. Kalman" <glendale202-mtmtax[at]yahoo.com> wrote:
- quote -

While the OP is far from clear in his description of what is
going on, he says that he is buying "on contract." It's
possible that means a land sale contract rather than a
typical purchase contract with a third party loan.

With a land sale contract the owner keeps title to the
property instead of having a mortgage. Under the contract
he's required to transfer title once the loan is paid off.

Stu

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Arcadefreaque wrote:

- quote -

You can if both of the following are true:
1 - This is your primary residence or second home
2 - The house is collateral for the loan (i.e. you stand a
chance of losing it if the loan is not repaid under the
terms of the contract)

- quote -

The loan contract you agreed to should include the interest
rate, terms of payment, and other such details of the loan.
Prepare (or have someone prepare) an amortization schedule
for the full term of the loan, showing the monthly payment,
principal amount paid and interest paid. Keep a copy and
give a copy to the lender. You can use the following formula
to calculate the monthly payment:

Given: Loan amount = PV (present value)
I = interest rate (e.g. 6%)
i = monthly = I/12 (e.g. 6% / 12 = 0.005)
n = number of months of loan

PMT = PV [i / (1 - (1 + i)^-n)]

For example - A $100,000 loan at 6% for 20 years results in
a monthly payment (principal and interest) of $716.43


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The lender doesn't issue you a 1098? He is required to do
so. It does not matter that he is a private individual.
The short answer is yes, you can deduct interest on a
private mortgage, but you need to report the SSN of the
lender on your Sch. A. If he will not provide you with a
1098 you could probably come up with your own amortization
of the loan. There is software out there such as TValue
(tvalue.com). There may be some free/shareware out there as
well.

I think you need to bug this guy to issue you a 1098. You
may have a matching problem with the IRS when they try to
match up the deduction with a 1098.

Mike

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arcadefreaque[at]gmail.com (Arcadefreaque) posted:

- quote -

It is standard practice in such transactions (as in most
"seller-financings") to create an amortization statement at
the time of closing -- which both buyer and seller retain,
to verify the status of the mortgage balance -- and also,
for tax reporting.

If you did not get one, I presume you could obtain one from
any accountant (for a fee).

Bill

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"Arcadefreaque" <arcadefreaque[at]gmail.com> wrote

- quote -

Using your records of the payments, and a loan amortization
schedule, you should be able to compute the amount of
interest paid.

You will need to indicate the name and tax ID number
(generally the SSN) of the person you paid the interest to.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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Arcadefreaque wrote:

- quote -

Use this mortgage calculator to determine the interest paid
each month

After entering the information (Be sure to enter the
beginning date.), press the amortization link.

http://tinyurl.com/7ffjv

Or (Same site)

http://www.bankrate.com/gookeyword/m...lculator.asp?l
oanAmount=50000&nrOfYears=20&nrOfMonths=240&inte
restRate=7&Submit=Calculate

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Arcadefreaque wrote:

- quote -

Recording the loan is not enough. Qualified mortgage
interest is interest you pay on a loan that is secured by
the home. In other words, you pledge your home to the lender
as security for you meeting your obligation to pay back the
loan.

If you have such a loan, see the instructions for Line 11 of
the Schedule A.

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"Arcadefreaque" <arcadefreaque[at]gmail.com> writes:

- quote -

If the loan is secured by the home, the interest is
deductible. Whether or not the language of the loan plus
recording the loan contract with the county secures the loan
by the home under your state's law, I know not. But it
probably does.

- quote -

It is an itemized deduction, yes. Whether or not you get
any tax benefit depends on how the total of all your
itemized deductions compares to your standard deduction.

- quote -

Assuming (perhaps a big assumption) that this loan is a
typical amortized loan, go poking around the net for
websites with mortgage calculators, put in the terms of the
loan, and print out the resulting amortization table. That
will tell you how much principal and interest is in each
month's payment.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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I am purchasing a home on contract (arms length?) from a
private individual where the loan contract has been recorded
with the county and the lender (private individual) is
listed on the recording. Can I deduct the interest that I
pay each year on this home? If so, since I get no interest
statements from the lender, what this the best way to
calculate the interest paid?

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