I want to "rent to own" my house out , will I have to file tax's on the interest I charge?

Question

If I was to land contract my house to someone.. when I set the interest rate with them; do I have to claim that on my taxes?

Or could I offer a rent to own, with so much going towards the princable, without the hassel of interest?

Answer 1

Interest is taxable as part of your income.
Why would you loan someone the value of your home without interest?
Even rental is income after expenses, and is taxable.
Taxes are only a percentage of the interest, dependent on your total income. If there is a mortgage the interest is deductible.

There is a net income after taxes, ya know.

Answer 2

there is not any interest in contact.... it is an social gathering a million. You supply the guy the alternative to purchase the homestead for a set value interior of a set time period, a million-2 years frequently (say you position the sales value at 100k) 2. you position a lease fee in line with month 3. you position an quantity of this month-to-month fee which will be used as credit in route of the down fee of the homestead (meaning you charge $one thousand month-to-month, $three hundred will be used as a offered credit amassed with each fee might want to the alternative to purchase be exercised) So after a million 365 days the renter has amassed $3600 in route of the acquisition of the homestead. After 2 yrs it is 7200. This surely is over 7% down that could actually help the renter even as that's time to get a private loan. 4. you will pay taxes surely on money in in this funding sources each year, that signifies that you subtract you sources prices from the total rents received. prices which incorporates mortage interest, taxes, coverage, upkeep, and the sturdy one, depreciation, to call some. it is internet earnings or loss is further or subtract out of your undemanding earnings. 5. If the acquisition determination is exercised and also you promote the homestead, it truly is a not straightforward question. The tax outcome relies upon on in case you lived contained in the sources as a first position of abode for 2 of the perfect 5 years. if so, as a lot as 250k of the internet earnings of sale for human being and 500k for joint, is excluded from being taxed. If no longer, there are different issues which will dictate how that earnings is taxed, which incorporates your tax bracket, length of time you've owned the sources, etc... wish this allows,,,

Answer 3

The basic rule when considering 'taxes due' is that 'all' earned income will incur a tax burden upon you in America...Your interest income will, under normal circumstances, require you to claim the 'interest' as income. But, you will be able to off-set the amount due, with liabilities incured that you are allowed to claim.
Check with the Internal Revenue Service. They offer all the information you will need on the matter.

Answer 4

Best to ask a tax person for the correct answer to this question. I would think that if you are making money from this rental, you would have to pay taxes on that money and it would be included as income.

Answer 5

Just add a bit to what EDWARD_1 already said....The intest is an income to u and it it taxable. Now i'm not that firmirlar with how it is used on ur taxes...Hopefully some one will add to this comment and take ur further to how it is applied on taxes.