Contract for Deed and Tax Write-Offs

(My Original Blog Post: http://ping.fm/fLmc3)
Interest Write-Off: You will want to check with your accountant on tax breaks for home owners, but a contract for deed has you as an owner on the property, so much like a house you can get write-offs for interest that's paid on your house.  Some of these tax breaks can change guidelines from year to year and differ from a homestead status to where you live in the property vs. investment properties that are rentals that you own on a contract for deed.

Depreciation with Taxes: Another feature you will want to ask your accountant about is depreciation.  Typically the way depreciation works on a property is that you take the sales price of the property, let's say $200,000 for an example, and on residential real estate we would divide that over 27.5 years.  That's $200,000 divided by 27.5= $7272.72 per year on average of a tax write-off against your taxes. Again check with your account I believe you can only do this with investment properties and not your current homestead, but please check into this. Also after many years you will have $7272.72 + $7272.72, etc added up as write-offs over many years. When you eventually sell the property, please keep in mind you will need to pay a recapture fee on that depreciated amount, and this will come back as taxes, so just be prepared and plan for that.