Greg McClelland, our Michigan Associaton of Realtors Legal Councel has ruled on the $8000.00 tax credit being able to be used for tax credit.
The Federal IRS rule was silent on the subject. Many folks in Michigan have either called or emailed me on IF the tax incentive could be used IF you purchase a home on a land contract.
According to the IRS code, Purchase means any acquisition. The word acquisition is not further defined in the IRS code. Therefore it is determined by state law, ie...Michigan law.
Under Michigan law is is undisputed that a contract vendee obtains equitable title to that property title under Michigan law. It also is clear that equitable title is substantially equivalent to legal title.
The court cases sites are:
- Baker v Klinger, 302 Mich 282, 288 (1942)
- Zurcher v Herveat, 238 Mich App, 267,291 (1999)
- Godsmith v Albion Public Schools, 373 Mich 397,402 (1964)
- Cardinal v United States 26 F3d, 48,49 ( 6th Cir 1994)
- Singer v American StatesIns, 245 Mich App, 370,378 (2001)
If you want me to email you the entire ruling, send me an email at Missy at MissyCaulk.com
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Makes sense. The Land Installment buyer does get the mortgage interest tax deduction. I'm surprised we aren't seeing more Land Installment buyers.
The big problem with Land Installment contracts is - - - where does the money for the real estate commission come from?????
good info Missy, I'll need to check on the laws here in NC.
Lenn, I have only done a few but all those times the seller paid the commission.
Does anyone know what the laws in NY say?
Thanks.
Tom Larsen