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agreement for deed tax questions

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rcardin

Contributor
Oct 30, 2007
512
47
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Arlington, TX
My rental went under agreement for deed last Jan. I have a 15 year note at 5%, have 10 1/2 years left and owe 62k. I sold it for 93k 8 1/2% for 40 years. What do I need to talk to a CPA about to make sure they understand the situation?

When it was a rental Turbotax worked fine for it. This year I have the rental, my DJ business and our normal income. I want to make sure that I have a CPA who knows how to handle multiple incomes from different businesses. We do have a dedicated company formed for each business.
 

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Diane Kennedy

Bronze Contributor
Aug 31, 2007
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My rental went under agreement for deed last Jan. I have a 15 year note at 5%, have 10 1/2 years left and owe 62k. I sold it for 93k 8 1/2% for 40 years. What do I need to talk to a CPA about to make sure they understand the situation?

When it was a rental Turbotax worked fine for it. This year I have the rental, my DJ business and our normal income. I want to make sure that I have a CPA who knows how to handle multiple incomes from different businesses. We do have a dedicated company formed for each business.
On the rental: You have sold your property and carried back paper. Using those terms, you're more likely to get a CPA who understands what you mean. So, the items the CPA will want to know:

- What's your basis in the property?
If you've had it as a rental, chances are you have the basis and accumulated depreciation. The CPA will want to know that information.

- Did you make any improvements to the property this year, prior to sale?

- Where there any cost of sale items? (advertising, commissions, etc)

- Give a copy of the sales doc and note to the your CPA (so he/she can see the down payment, interest, etc...)

- Who is going to prepare the Form 1098 for the buyer? (reports the mortgage interest)

- Do you have an impound account (either from your underlying note or from the sale) - how do you report that to the buyer, if you do?

- AND THE BIGGIE: Are you a real estate dealer? If you're a real estate dealer (ie, buying and selling real estate inventory), you can NOT take the installment sales treatment for the sale. That means that all of the gain on the property is immediately taxable, even though you haven't yet collected the money.

Other than that, your CPA will want to see the articles of incorporation/operating agreements (depending on structure) and SS-4 for your entities and of course, your financial statements with back-up.
 

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