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Old 07-16-2010, 03:48 PM   #1
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Land Contract Question

before i go pay legal and/or attorney fees, i was wondering if anyone has experience/knowledge of land contracts.

we're soon to move, and i REALLY do not want to rent. i was thinking of using a land contract option, especially in this tough economy(may be difficult to sell or find a qualified buyer).

i googled it naturally, but the intricacies are often left out in a search. i might not have even considered it except that my neighbor's son and family are interested.

thoughts? pros? cons?
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Old 07-16-2010, 07:09 PM   #2
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I am unsure if you asking about using one for buying or selling, but if you are considering using a contract for deed for selling your house, it seems risky to me. What if the buyer loses their job? What if the buyer has a fire or massive water leak and didn't have insurance? In either case, they may be tempted to walk away.

It would be much simpler and with no risk to you if your neighbors got a home equity loan from their bank and then "loaned" that money to their son so that he could just gave you a check (and then you give them the deed). After the son had the deed in hand, then he could get a home equity loan and pay back his parents (or they could just work out their own intrafamily loan).

My wife and I bought several acres adjacent to our house this way (with a home equity loan). The lawyer work was simple (less than $250) and was pretty much a deed transfer with the purchase price listed on the new deed. Then the new deed was filed at the courthouse.
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Old 07-17-2010, 01:52 PM   #3
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thanks Erik--yes, for selling.

there are some other considerations...i could ask the avenue you suggested, but i'm not certain the neighbor would go for it. they bought their home via land contract, and it's unclear if they'd like to be a co-signer of sorts(if you will).

we'll be paying my mother rent, so i could hold out to try to sell out right because she's offered to suspend our rent until we sell--only asking for help w/ insurance and taxes when due. you raise some good questions, which i've thought of. our taxes and insurance are in the mortgage btw.

i thought about asking for more than my mortgage as part of the land contract to cover "mishaps" and such, and to compensate me for my equity. even raising over what we pay would be cheaper than what they are renting for now. they seem pretty well set on this land contract, but time is on our side. there is of course the chance of a missed opportunity to sell via this idea...
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Old 07-21-2010, 02:44 PM   #4
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If you are buying from your mum...

Get both parties to a tax attorney, post haste.
January the 'death tax' goes back up, so the government will get a chunk of her estate, just because.
Now is the time to arrange to put both families estates into Living Trusts to avoid, defer and protect from the coming onslaught of taxes.

As to 'land' the question I have is why you want raw land.

As to the type of contract, contact a Realtor or a real estate attorney to see that all parties are doing what they want to do and that everybody is protected. There is way too much legal stuff required to transact real estate sales without professional assistance. What you could pay when something goes wrong will be far more than a fee up front.
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Old 07-22-2010, 04:59 AM   #5
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Quote:
Originally Posted by shatto View Post
January the 'death tax' goes back up, so the government will get a chunk of her estate, just because.
Now is the time to arrange to put both families estates into Living Trusts to avoid, defer and protect from the coming onslaught of taxes.
but what of the promise by the current admin that taxes would only be raised on the wealthiest individuals?
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Old 07-22-2010, 11:12 PM   #6
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but what of the promise by the current admin that taxes would only be raised on the wealthiest individuals?
OOPS! My bad.
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I use and talk about, but don't sell Amsoil.
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06 4.7 Tundra replaced a 98 Dakota 3.9.
623,000 miles on original engine and transmission, using Amsoil by-pass filters and lubrication.
+Everybody knows something you don't know.
+Artists prove truth can be in forms you don't understand.

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Old 07-23-2010, 12:43 PM   #7
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It is my understanding that the upcoming death tax will only apply to the amount of an estate which exceeds $1 million.
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Old 07-24-2010, 01:08 PM   #8
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Quote:
Originally Posted by Erik View Post
It is my understanding that the upcoming death tax will only apply to the amount of an estate which exceeds $1 million.
http://www.youtube.com/watch?v=QVBY_SqzJtI

The point is that you needto be sure. Not guess. Not hope or wish. Unless you think it really is the government's money.
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06 4.7 Tundra replaced a 98 Dakota 3.9.
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+Everybody knows something you don't know.
+Artists prove truth can be in forms you don't understand.

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Old 07-24-2010, 01:55 PM   #9
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I agree that one needs to plan ahead.

Here's my source:

From: http://www.irs.gov/businesses/small/...164871,00.html


"Estate Tax


The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your "Taxable Estate." These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit. Presently, the amount of this credit reduces the computed tax so that only total taxable estates and lifetime gifts that exceed $1,000,000 will actually have to pay tax. In its current form, the estate tax only affects the wealthiest 2 percent of all Americans.

Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004 - 2005; $2,000,000 in 2006 - 2008; and $3,500,000 effective for decedents dying on or after January 1, 2009."
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