8% for an owner contract, especially if you are not financable through a lending institution, is perfectly acceptable. The IRS has usury rates (minimum & maximum, long term & short term) that can or must be charged. State usury rates can be found here: http://www.lectlaw.com/files/ban02.htm This is often a win-win situation for a buyer & a […]
Written on Monday, August 4th, 2008 by irvingprince :: 0 comments to this post
8% for an owner contract, especially if you are not financable through a lending institution, is perfectly acceptable.
The IRS has usury rates (minimum & maximum, long term & short term) that can or must be charged. State usury rates can be found here: http://www.lectlaw.com/files/ban02.htm
This is often a win-win situation for a buyer & a seller. The seller will only have to pay tax on the yearly amount of interest & whatever portion of the principal is capital gain, if any.
You in turn still get to deduct the interest on your personal residence & you didn’t have to pay 3% in loan fees & closing costs.
If the seller has an owner contract of their own that will be wrapped into the loan, it would be advisable to have all payments go to a contract collection agency so you are assured the seller is still making their payment from your payment & then they send the remaining balance on to the seller.
They also do all the IRS reporting for interest & you know how much of each payment is interest & principal.
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