Tax Law (Questions About Taxes)/zero interest mortgage


Hi, I want to sell my old house to the renter who has lived there for several years.  This will be an owner-financed sale.  The home values have declined drastically, so I won't make any money from the sale any way you slice it.  I'm not really interested in making money, I just want to be rid of the house.  (I'm interested in LOSING *LESS* money.)  

That being said, If I can sell the note to someone else, that would be good too,  I'd be willing to take a small hit there also.

I suggested a zero interest mortgage because: 1) simplicity 2) I'm not interested in a profit 3) I don't want to figure the taxes on this fake income which is really a loss spread over several years.

However, my attorney says that I need to charge a minimum interest because of IRS rules.  Are there any scenarios where this would not apply to me.  I'm so sick and tired of the IRS.

Thank you

ok. my bad. I answered using my iphone while I was outside....and in a hurry  as I am now.  and yes, I did not bother correcting the underlines as I was in a hurry.  But I did give you the correct answer. for which you did give me credit.  Chastising my spelling makes you look like the ungrateful POS that you probably are.  And, yes, I know this topic at great length, but did not feel like giving you all the answers.  Your lawyer is right on the interest, but there are other structuring issues which could bite you - recapture of gain even when you don't have the cash or better yet, using the deferral of the installment gain provisions.  Plus the allowed or allowable depreciation and what the basis was when you converted it from your "old house" to a rental property - being careful that you documented the fmv then (which might be lower than your original acquisition price).  

so< I wish you good luck in your adventures; you will need it.  


you must charge interest
yiu also have depreciation recapture and gain to possibly recognize
lots more than meets the eyE. Lots of trap for giving short shrift as yiu aparently doing now.

Be careful and judicious in your moves.

Good luck  

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Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).


19 years cpa. ms tax. NOTE: My discussions are only a general information and do not constitute tax advise without entering into a specific agreement and executing an engagement letter; This free chat is nothing more than general information and should not be construed as tax advice nor does my response or replies imply an agreement to provide client specific advice or other guidance for purposes of avoiding IRS tax or penalties and should not be relied upon without your own validation and confirmation of the how the discussion may fit your facts... Not having all the facts and/or not having a direct client relationship prevents me from providing the most accurate replies as possible and I highly suggest using a local CPA to provide you with written advice and guidance. Taking matters into your own hands is much akin to trying to land an airplane without a license. It is easy to FLY a plane, but LANDING is when critical experience is key. In short, caveat emptor; do your homework and don't just rely on free chat board advice anywhere, anytime.

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