If you have a property that you wish to sell, you are certainly not alone in this turbulent real estate market. These days, with the amount of unsold properties on the market, many owners are getting desperate when it comes to moving their real estate. A knee jerk reaction that is common is to lower the prices in order to get the property to move. However, there is a way that you can sell your investment property in this market without reducing its price drastically; but, in order to do this you will need to educate yourself on how to sell property using a land contract.
Understanding the process of a contract for deed or an installment land contract is the first step in learning how to sell property using a land contract. When a potential buyer can’t secure financing through a third party or doesn’t want to go through traditional financing, then an owner of a property might agree to the buyer making installment payments on the property.
The seller holds the title for the property until the last installment payment has been made. That is about all that the seller has to do in this transaction. The buyer has most, if not all, of the responsibility for the upkeep of the property. A buyer can enjoy all the benefits of ownership without legally being the owner of the property.
From a tax standpoint, it is worth noting that the IRS considers a contact for deed or a land contract as a sale. For that reason, the buyer will have all the tax burdens of ownership. For the seller, he or she must report the transaction to the IRS as an installment sale. What this means is once the transaction has begun, the seller, though still possessing the title to the property can’t enjoy any of its tax benefits.
The truth is that learning how to sell property using a land contract is a great solution for everyone involved. For the owner, you are able to pass off a real estate property, get paid and do little more than hold a piece of paper defining who actually owns the property. For the seller, they can enjoy all the rights of owning a property, they can improve it, rent it and receive income off of it while working towards owning the property in the near future.
Knowing how to sell property using a land contract is an excellent way to help people invest in real estate when the banks and other traditional lenders are not being so willing to lend money. This can ease the tension of maintaining a property that you want to get off the books.
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