Get the $8k Tax Credit as a L/O Down Payment?!

[Guest jvmccall]

OK, OK, OK, OK - I am getting excited!!! I think I may have discovered a way to collect the new $8,000 home purchase tax credit as an option deposit from a tenant-buyer!!!! OK, so I am still fleshing this out... but this could be huge!

 

I have not done this yet, but here's how it basically works and it makes perfect sense...

 

1) Instead of doing a "lease option" contract, do a "contract for deed" or "land contract" between the Seller and the Buyer.

 

2) Require that the Buyer pay the Seller (you) all of the $8,000 tax credit as a down payment.

 

3) Have the buyer go to your CPA. Fill out the appropriate form to amend their taxes.

 

4) Put in that form your bank account and routing number so the funds can come to your account. Or, the refund could go directly into a joint bank account (you & buyer) that you check daily, first thing. If it is at a bank where you have other accounts, be sure that you are able to e-transfer funds from one account to another instantly. Early bird literally gets the worm!

 

5) File the amendment and collect the tax credit a few weeks later!

 

Again, from what I understand, a "land contract" or a "contract for deed" is an installment sale. The deed will sit in escrow until the terms of the contract are fulfilled and the Buyer gets their own mortgage. It is a legitimate way to really buy and sell a home. My lawyer has done them & I know of several Title Companies that do it. You can also set them up where you can evict the buyer instead of foreclosing.

 

Don't forget, an existing lease-option can be converted into a contract for deed sale at any time, thereby creating opportunities to qualify for the credit now on existing properties!

 

I am going to contact my attorney and accountant about this stuff. I will let you know what they say!

 

Quick side note for your fancy... I just read this on another forum. This is about collecting the tax credit before closing a traditional sale... "People have been receiving this credit PRIOR to buying their new house. My understanding of the credit was that you were supposed to claim it after the purchase of the home, but I spoke with a CPA that I know and he told me that the credit can be claimed before the home purchase as long as they buy a home prior to the cut off date of the credit. The worst that would happen is that if they don't buy a home, they would need to pay the credit back."

 

How cool is this?!

[Jason (AL) 1]

Yeah, from the flippinghomes forum?

I read that too.

 

I asked it on a private forum I'm a part of

concerning owner financing and was told

it could be used as the down payment.

 

So, yeah, this could be used to our advantage

in moving properties and getting paid.

[MichaelC 160]

Just wondering. . .when you two are cellmates at the Federal pen, who's got the lower bunk and who's got the upper?

[Guest jvmccall]

I just talked to my accountant & he said he sees no problem in requesting the $8,000 tax credit for a Buyer in a land contract / contract for deed scenario. He didn't know about direct deposit of the money into the Seller's account, but he liked the idea of a joint account. He also confirmed that if someone buys a house today, they can file an ammendment to their 2008 tax return and get a check in 6-8 weeks - or faster if you do direct deposit.

[Jason (AL) 1]

Just wondering. . .when you two are cellmates at the Federal pen, who's got the lower bunk and who's got the upper?

 

Bottom.

I've had to spend the night on the top bunk

for a night a few years back. Got arrested

with my other 2 friends for climbing on top of the movie theater,

in which one of the said friend's dad owns.

We had all just turned 18, and given that the other 2 had jumped off

the top of the building in their attempts to run, they almost

broke their ankles. Consequently, I got stuck on the top bunk, seeing

they were unable to make the climb to a top bunk.

They even kept the light on all night, so being the clever fella I was (and still am),

I used my T shirt to unscrew the bulb. 30 minutes later, as I was just about to

get to sleep, the officer came back and made me screw it back in.

Not a fun night, but we had a good laugh once we got out.

 

True story.

 

However, nothing about this to land either of us in that

situation, as there's nothing shady about it.

 

Should that occur, you're my first call, MC!

[Guest Diver]

he he he, who's the husband and who's the wife?

[MichaelC 160]

. . .you're my first call, MC!

"MC, uh, got a situation here. Send lawyers, guns, and money!"

[Guest jvmccall]

Just wondering. . .when you two are cellmates at the Federal pen, who's got the lower bunk and who's got the upper?

MichaelC, I am new to this board (and I LOVE this forum by the way), so I don't know if you're being funny or serious. Do you think that what I am talking about is illegal or wrong? And if so, why? I have talked to my lawyer, my accountant, and 2 title companies that will do these types of deals for me. I am still a big lease option fan & I do tons of them. But I think this might have great potential. If you don't mind me asking, what are your reservations & concerns? I just discovered all this stuff late last night & I am pretty pumped about it.

 

Are your reservations with doing these deals as a "contract for deed" & accelerating the loan? From what I understand, those types of deals wouldn't trigger the due on sale clause any faster than a lease option would. Maybe I am wrong.

 

Thanks for your honest feedback.... (gulp)

[MichaelC 160]

Joe, I was being a wiseguy. Truth is, it sounds like you have already done your research on this and know more about it than I do. As you said, you've already spoken with an attorney, a CPA, and a title company and they all seem to be on board. With your due diligence in hand, I say go for it.

 

Just be sure your passport is valid in case you need to leave, you know, in a hurry. . .

[Guest jvmccall]

Joe, I was being a wiseguy. Truth is, it sounds like you have already done your research on this and know more about it than I do. As you said, you've already spoken with an attorney, a CPA, and a title company and they all seem to be on board. With your due diligence in hand, I say go for it.

 

Just be sure your passport is valid in case you need to leave, you know, in a hurry. . .

Funny! Once I do one of these deals, I will create a new post and let everyone know how it goes.

 

One of the first things I am going to do is contact all the tenant-buyers on the 9 properties I own right now, and try to get them to enter into a new "contract for deed" and add this $8,000 tax credit to their future down payment. I don't see why they wouldn't do it. If they don't take advantage of this tax credit before the end of the year, they will lose it.

[TAT 0]

Joe,

 

I've looked into this quite extensively and have come to the same conclusion. Your buyers could amend their returns using the 1040x form, however there is no direct deposit for amendments. They will get an actual check sent to them within 12 weeks or less. Lets just hope they stick around after they get it.

 

TAT

[Guest jvmccall]

Joe,

 

I've looked into this quite extensively and have come to the same conclusion. Your buyers could amend their returns using the 1040x form, however there is no direct deposit for amendments. They will get an actual check sent to them within 12 weeks or less. Lets just hope they stick around after they get it.

 

TAT

I think you might be wrong. My accountant said it shouldn't be a problem to do the direct deposit. I have not done one yet though, so I will keep you posted. I did find IRS Form 8888 (http://www.irs.gov/pub/irs-pdf/f8888.pdf) which you can use for direct deposit into one or more accounts.

[TAT 0]

Joe,

 

I've looked into this quite extensively and have come to the same conclusion. Your buyers could amend their returns using the 1040x form, however there is no direct deposit for amendments. They will get an actual check sent to them within 12 weeks or less. Lets just hope they stick around after they get it.

 

TAT

I think you might be wrong. My accountant said it shouldn't be a problem to do the direct deposit. I have not done one yet though, so I will keep you posted. I did find IRS Form 8888 (http://www.irs.gov/pub/irs-pdf/f8888.pdf) which you can use for direct deposit into one or more accounts.

 

 

I hope I am wrong, but I don't think so. Form 8888 does not reference Form 1040x which is used for amendments and there is no place on the 1040x for direct deposits. Either way, do keep me posted.

[verbatim 1]

Update! Update! Update!

 

So does this strategy work or is jvmccall doing push ups in solitary confinement???

[MichaelC 160]

Update! Update! Update!

 

So does this strategy work or is jvmccall doing push ups in solitary confinement???

I don't Joe is doing hard time yet. But as regards that $8K credit, I am constantly hearing conflicting reports about what is and what isn't permitted. So I just stay away from that program altogether.