Home sellers: Carry back mortgage and profit

Why method is recommended over land contract sale

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Editor's note: Robert Bruss is temporarily away. The following column from Bruss' "Best of" collection first appeared Sunday, April 16, 2006. DEAR BOB: My husband and I are avid readers of your columns. We own a townhouse that we bought as an investment. Now we are considering selling it. If we agree to owner financing and retain title until the loan is paid, can the buyers deduct the mortgage interest and property taxes on their income tax returns? --Melana W. DEAR MELANA: Yes. The situation you describe is called a land contract sale, contract for deed, contract of sale, agreement of sale, installment land sale, and a zillion other names. Purchase Bob Bruss reports online. The basic idea is the seller retains the legal title until the buyer makes all or an agreed number of payments to the seller. If there is an existing mortgage, the seller uses part of the buyer's payments to keep payments current on that mortgage. As the seller, you remain the legal owner. The buyer becomes the eq...