Land Contracts are OK for Claiming the $8000.00 Tax Credit

Many of you have asked me and evidentially the Michigan Association of Realtors legal councel has been getting this question too:

Can buyers in Michigan who buy on a land contract claim the $8000.00 tax credit?

Because the Federal Legislation is silent on the issue, Greg McClelland, our legal councel of the Mi Association of Realtors wrote an opinion on it.

If you want the entire opinion, leave me a comment here and I will email it to you.

The bottom line is “there is no rational basis for treating land contract purchases differently than mortgagors for the purpose of the credit.

The ruling is not hard to understand, hey, I even understood it. So I’ll be happy to pass it on.

Homes for Sale in Ann Arbor, and throughout Washtenaw County

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Comments

comments

135 thoughts on “Land Contracts are OK for Claiming the $8000.00 Tax Credit

  1. Also, yesterday it was announced in several blogs that the LENDERS can now use the $8,000 credit BEFORE the finalization of a purchase, ie: down payment or closing cost, if in fact this is true, this can be HUGE to the buying public.

  2. WOW, did they change their minds about using the BRIDGE LOANS quickly. Shame on the government for not having all the facts before telling us we could do it.. Rescinded. GONE >> POOF.

  3. Hi there my parents are on social security and i found them a land contract with no down payment the home is a doublewide 2005 on land will they qualify for this tax credit and being a land contract with zero down do they just calim this on their taxes next year to get this credit and do they have to pay it back seens it is before dec of 2009? plus with them being on social security are there any programs out there to help them?
    thanks much for your time
    sheri

  4. I would love to have any informaton you might have that applies to land contracts and the first time home buyer tax credit…difficult to find anywhere.
    thanks

  5. Sheri, when was the last time they owned a home, it has to be within 3 years. There is a form you fill out next year. If they buy in 09 they do not have to pay it back.

  6. THANKS! I justed purchased my first home on a land contract and was concerned if I would be able to claim the credit. Can you send the entire opinion? Thanks again.

  7. Our office has been contacted by a realtor/broker in Kalamazoo and we offered to present this question to our IRS liaison in Detroit. His office hadn’t received the question previously. Would you please provide a copy of your opinion so that we may forward it to the IRS for consideration and in connection with our constituent’s request? Thank you!

    Ed Sackley
    District Representative
    Congressman Fred Upton (MI-06)

  8. Hey there,

    I was just looking around on the IRS website and came across this…

    Q. Does a taxpayer qualify for the first-time homebuyer credit upon the signing of a contract for deed, since normally the deeds are signed and executed but held in escrow until the provisions of the contract have been met?

    A. Generally, no. A taxpayer is not eligible for the first-time homebuyer credit unless there is a completed sale. Under the facts presented, the contract for deed may not be a completed sale because all of the provisions of the contract have not been met. However, the determination of whether there is a completed sale would depend on the facts and circumstance of the particular case and perhaps state law. (New 06/12/09)

    It was at http://www.irs.gov/newsroom/article/0,,id=206291,00.html

    So it seems that a land contract won’t count? Could someone confirm this and/or provide examples of how one could structure a land contract so it did count?

    Matt

  9. will you send me the opinion on the land contract plus tax credit… we are now going this route, since we are running into walls with a rural development loan.

  10. IT IS NOW JUNE 25TH. WHAT IS THE ANSWER? CAN WE USE THE TAX CREDIT FOR LAND CONTRACTS, OR NOT. MORTGAGE LENDERS SAY NO. THEY SAY ONLY FHA IS ALLOWING TAX BREAK FOR DOWN PAYMENT. THANKS

  11. I would love to see the full opinion on the land contract purchase and the $8000 tax credit. If you don’t mind emailing it to me, that would be great.

  12. I would like the full report from McClelland. I have seen blogs from investors saying they have sold properties on land contract and had the tax credit assigned to them to increase the down payment. I would like to find out how this is done. Also if land contract does not work for tax credit, why not sell on a purchase money mortgage (deed property to buyer and take back a mortgage) It is in essence the same thing, you have to foreclose in case of default either way.

  13. Confused in Michigan, would like to know if land contract and $8,000 rebate will work together? Any information would much appreciated.

  14. So has anyone done a land contract , filed for the 8,000 and got it??
    I live in Kentucky, does anyone know if that state accepts land contacts
    as sufficient to get rebate? Please send me full information

  15. Could you please forward the entire article regarding the $8,000 credit. We’re looking to do a land contract.

    Thank you,

    Dianna

  16. Could you please send me the info too? I am buying a house on land contract within the next month and would appreciate the extra info. Thanks..

  17. A contract for Deed may received the Tax Credit and here is the copy and paste from the IRS website:
    http://www.irs.gov/newsroom/article/0,,id=206291,00.html

    Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer’s payment obligations?

    A. If the taxpayer obtains the “benefits and burdens” of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (New 7/2/09)

  18. I will love to have the full print out about land contract and tax credit. About to sell on land contract and didn’t know if they would qualify.

  19. please send me your opinion. I am closing on a land contract in 10 days and was told that it does qualify for the tax credit because it will be a recorded land contract and i am not buying it from a relative.

  20. I would love to see what the full opinion says. I live in Nebraska and signed a land contract and have been getting mixed results also. Would be much appreciated!

  21. Can you please send me this particular article, on the land contract and allowing me to qualify for 8,000 tax credit ……. I live in Nebraska for the record, thank you in advance .

  22. I too would like the opinion given on this or any other updated material on LCs. What documentation besides form 5405 is required? There is no HUD with a land contract. Is the govt taking people at their word??? Also can the tax credit be assigned to me as a seller to be used as down payment?

  23. I am negotiating a land contract right now. Is there a definite “yes” or “no” on the 1st time homebuyer’s credit for a land contract agreement. Would you please send me your article.

  24. Would love the information. I will be selling my home on land contract next month. The buyers want to use the credit for down payment if possible.
    Thank you!

  25. I believe that land contracts, if writtten properly qualify for the tax credit….I’d like a copy of the article or opinion of your legal councel…thanks

  26. We are looking into buying a land contract here in Mich. I am new to all this info. He(seller)wants us to just make the payments to his mortgage. What would we have to do to get this tax credit? The house needs some work and this would really help.
    Thanks a bunch!

  27. I would love to think creatively in this economy and our government has assisted us in this notion. The IRS has shared the good news that owner financed arrangements will be rewarded for those with wounded credit by allowing this arrangement to be included in the tax credit group. Congress has done its part to encourage wannabe homeowners that are often young people with credit mistakes…

    I would like to do my part by entering into an owner finance with a fabulous young couple; however, WELLS FARGO MORTAGAGE COMPANY has informed me that they will excersice the Due-on-Sale clause if I do this… meaning I cannot owner finance these young buyers or WELLS FARGO will call the loan due..

    SHAME ON YOU WELLS FARGO for counteracting everything the government and our people are tyring to do for each other in these trying times!!!

  28. I also entered into a land contract and would like to know if I qualify for the credit. Please email the article.

    I sent it Ryan. Hope it helps.

  29. Missy, we bought on land contract in August of ’08 it was a 2 year buyout and would come up in August of ’10. If we purchased before August, we it be eligible for the credit? Please send article.

  30. I purchased a home on a land contract on October 31, 2008. The home I lived in before that was foreclosed on January 2, 2008. I lived in that house for 9 years. Do I qualify for the $6500 tax credit? What dates, years does it include?

    Please send me a reply.

    Thanks,

    Jenny

  31. My wife and I own a few homes and are selling them through land contract and I would like to know about the tax credit informaiton so I can pass it on to my potential buyers.

  32. We are looking into buying some Detroit properties, and have been told that land contracts might be a way to go. Please send your complete opinion on this. Thank you.

  33. Please send me a copy of the full opininion. I have a tenenat who approach me on this issue. Did any of your bloggers who actually did a land contract for their tenants? please share your experiences. Thank you

  34. Missy could you please send me what you have. I signed a land contract back in November and would like to also see what I need to do to get the $8000

  35. Missy could you please send me what you have. I signed a land contract back in April 2009 and would like to see what I need to do to get the $8000

  36. Missy hi could you send me all the infor u have on land contract and also where i could find a land contract home if you know.

  37. hiya Missy,
    Me and my wife entered into a land contract, early 2009 …
    only the contract owner – is my father, as i have a less than par credit score. might i be able to claim this?
    Also, could you send me the same michigan opinion also?
    Any additional information would be greatly appreciated also. thanks alot,
    drew

  38. My son is planing on purchasing a home from his inlaws on land contract. Will they qualify for the tax credit.
    Thank you in advance for you time.
    Sue

    I am afraid not it has to be arms length.

  39. I would like a copy of the attorney’s opinion on land contracts. Mine was entered into 4 years ago, but title is retained by the mortgage issuer until completion in 2009. I was considering that since title hasn’t changed and no foreclosure would be necessary to repossess, then this is a rental with option to purchase at completion.

  40. Please send me a copy of the option we are getting ready to do a land contract and this would be helpful. Thank you.

  41. Please send me opinion.

    I’m frustrated because I can see I should qualify for the credit but because I will be doing a land contract from a close relative, I will not get it, even when I will have “all the burdons on ownership”

  42. Hi Missy Caulk,
    I am very interested in receiving the entire opinion on the $8,000 tax credit for a land contract sale. I am a CPA in NJ and have a client in Michigan who is the process of a land contract and wanted to know if it qualified for the $8,000 tax credit. I also thought that this type of sale would qualify.
    Diane Radosti

  43. I am interested in receiving the opinion.

    We live in Michigan and are looking to make an offer on a land contract and close in the new few months. This would be our second home the first is in the forecloser process we have lived in this home for over the 5 year requirement. Thanks for your opinion.

  44. I am building a home. Been in the process of getting the loan for about 4 months. We hope to break ground befor the biggining of April. However, I am not sure the will have an Ocupancy Certificate by june 30. The IRS has told me that all I need is the occupancy permit for new home contruction. Do you know if that is true?

    1. Are you doing a Construction loan and then another loan after you finish the house?
      Or is it a one time closing with a HUD?
      I would ask an attorney as having a final C of O has never meant you couldn’t close on a house.

  45. Would you be so kind as to send me a copy of the opinion. We would like to sell our home on land contract and need to know if it works for the tax credit
    Thanks

  46. My husband and I purchased a lot in August 2009, with the stipulation that we would build our home within three years. Do we qualify for the $8,000.00 tax credit? Our CPA said we donot qualify? Is he incorrect? We are now in the process of building our home and is due to be completed in Dec. 2010. Thank you, Pat & Ed Harris

  47. I filed for the 8000.00 tax credit and the IRS says I need a closing statement. (I don’t have one since I have a land contract. We signed a contract for the home and it is in our name) Please help.

    1. Send them a copy of the land contract. Did you not file it with a title company?
      It should have been a recorded land contract and the title company should have one.

  48. Please send me the oponion on Land cantract & $8,000.00 from, Greg McClelland, our legal councel of the Mi Association of Realtors link. Thanks

  49. I am trying to purchase a home. I thought everything was going well until I found out today that FHA will not give me a mortgage because I had a Bankruptcy discharged in November 2006 but the home I let go into bankruptcy didn’t sell until December 2007. Now I am told I have to wait until December 2010 before I can get an FHA Loan. What if I went Land Contract. Would I still qualify for the $8000 tax credit. Please advise. Thanks Jim Totoraitis

    1. The 8000.00 credit is for First Time Homebuyers, not repeat buyers. Their is a 6500.00 credit for repeat buyers and yes a land contract should qualify. But, speak to your attorney or CPA to confirm.

  50. Please send me the information regarding repeat buyers and land contract purchase from Greg McClelland. We are wondering if we sign a land contract before May 1st if we will qualify for this credit?

    Thank you

  51. I’d love to see this ‘legal opinion’.
    Obviously it’s late, but I like to read legal opinions as a hobby.

    Thanks.

  52. Whether you are interested in buying strictly raw land, or if your objective is to find land with an existing home and related structures like barns, caretaker quarters, etc., either should be easy to locate with the help of a good real estate agent in all parts of Oklahoma.

Thoughts?