Tax Question for a Land Contract

   I have a question regarding tax write-offs ofr the interest paid on your mortgage.  Of course I will not hold anyone liable for the info they provide, I just wanted to some info if anyone knew for sure.  

  I have bought my first property (duplex) on land contract and have a short term loan from a private investment company.  I have had it for 9 months.  I have heard that you can deduct some of the interest that you pay on your mortgage from your taxes.  I was wondering if the land contract will affect the tax deduction? Any info would be helpful.  Thanks in advance.

Avi

No, a land contract is an installment sale as far as the IRS is concerned.

Mortgage interest you are paying on the contract is deductible on Schedule A if the property is your primary residence, or on Schedule E if the property is an investment rental.

Thanks Dave T. I am in the process of refi in my name so I will write it off for 2007. I appreciate the help! Avi

I hope I did not mislead you.

The interest you paid in 2006 should be claimed on your 2006 tax return. Whatever you pay in 2007, will be claimed on your tax return next year.

The IRS is picky about things like this.

Oh, that is great news. I guess I didn’t know what an installment sale was and assumed that it meant I could not claim the interest paid. Thanks for the help! Avi