?Land-ing? A Good Mortgage Note [mortgagegoal.blogspot.com]
Author: David Nethercott talks about the impending housing crisis and about his book Subprime crisis and Mortgage Stress at www.elifeofjoy.com Why are 900000 homeowners in Australia expected to be in severe mortgage stress by September 2008? Are you ready to lose your property portfolio and have to start again? Why are so many Americans just handing their home's keys back to the banks and walking out? Can WE avoid this in Australia, UK, India & Europe generally? How can we survive? What action do we take? www.elifeofjoy.com
mortgagegoal.blogspot.com Home & Property Owners : Subprime Crisis & Mortgage Stress
Although mortgage providers in the UAE may have slashed interest rates or increased LTV (loan-to-value) ratios, cash still rules the Dubai property market. Over 6600 units valued at Dh8.4 billion were purchased in cash during the first quarter of 2012 ... Cheaper mortgages, but cash still king in Dubai property market
A gentleman called me a few days ago wanting to sell his mortgage on a small parcel of land located in a remote area, far from any population centers. The land had access to well water but no other improvements. He had purchased the property last summer for $ 60K and had recently sold it for $ 110K. Naturally, he wanted us to pay him the full note balance.
With this real estate note, where do we even start? It has so many challenges and red flags that no investor would even consider buying the full note. The isolation of the property and the fact that he wanted to flip what was almost certainly an overvalued note limits most note buyers to either buy a tiny piece of the note or, more likely, pass on the real estate note altogether.
Right away, I knew that we would pay less for this mortgage note when he told me that it was collateralized by land.
Real estate notes on land without several improvements are even harder to sell because of the added risk. We consider improvements to include power, water, sewer or septic, paved roads going to the property, etc. These types of improvements all add value to the property and make it more likely that it will someday be built upon.
If you’re thinking about selling a parcel of land, recognize that a buyer will probably not be able to get a bank loan. Unless they can pay all cash, you will probably need to carry a note (offer owner financing). To decrease the risk of the note and to maximize the amount that you’ll receive if you later sell it, you’ll want to structure the note correctly. Here are a few ideas:
1.Get as big of a down payment as you can. At a minimum, get 25% down, and aim for 30-50%.
2.Sell to a buyer who has excellent credit, and who has the finances and willingness to cherish and improve the property.
3.Be certain that the sales price is close to the actual value, as determined by an appraiser.
Happy investing! Find More ?Land-ing? A Good Mortgage Note Issues
Question by Robert W: Can land investment mortgage interest be tax deductible on Form 1040 Sch A if there is no investment income? I'm holding unimproved land properties for investment purposes and wonder if I could deduct the mortgage interest expenses while I don't make any income from them on Form 1040 Schedule A? Can I accrue all the previous mortgage interest and expenses until I sell the land properties? Best answer for Can land investment mortgage interest be tax deductible on Form 1040 Sch A if there is no investment income?:
Answer by jseah114
No you can't. You can only deduct the mortgage interest on your principal residence and a second home. For land that is held as investment property, the mortgage interest you paid is added to the basis in the property.
Answer by bostonianinmo
Only if the land can be classified as a residence. You generally can deduct the mortgage interest for a second residence but raw land does not qualify as a residence. However, you can deduct investment interest expenses to the extent of investment income derived from the property. Deductions disallowed due to a lack of income may be carried forward to future years and taken against the capital gains ultimately realized on sale. This is NOT the same as adding the accrued interest to the basis of the property but has the same effect. The difference is a technicality today but future changes to the law could affect the treatment of the interest expense. See Form 4952 & instructions for further information.
Answer by kgmboat
you have to carryover the interest until you have investment income
