Home Buying in 29316>Question Details

Dkstevenson1, Home Buyer in 29301

With Owner financing, who owns the house? Will an "owner financed" house qualify for the tax credit this year? Need options for financing.

Asked by Dkstevenson1, 29301 Mon Oct 5, 2009

on rebuilding my credit, have $ saved for a down payment but do not qualify for a mortgage. I'm open to options, suggestions. I hate writing my rent check every month!
dkstevenson1@gmail.com

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3
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the
taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.
According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.
0 votes Thank Flag Link Fri Nov 6, 2009
As mentiond by Patrick, it can depend on how the financing is done. I sold a personal residence on a land contract. Under those terms the buyer does not actually "own" the home until the final payment is made. I hold the deed until satisfaction of the loan.
0 votes Thank Flag Link Thu Nov 5, 2009
In traditional financing the buyer borrows money from a third party (lender) and pays the purchase amount to the seller. The seller is now out of the picture and the buyer makes payments to the lender until the loan is paid off.

With seller financing, the seller agrees to transfer title to the buyer in exchange for a note and a secured interest in the house. The note is paid off just like a mortgage but is paid to the seller instead of the bank.

Depending on the terms of your purchase agreement with the seller, you may be eligible for the tax credit.
0 votes Thank Flag Link Mon Oct 5, 2009
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