RitaB Posted September 24, 2007 Report Share Posted September 24, 2007 Seller received payments from buyer of real estate beginning in April 2006. Closing statement was prepared in Sept 2007 and the payments received prior to closing (including some in 2006) were deducted on the settlement statement as "payments on contract." I believe I should report as installment sale, year of sale 2006. Is that correct, and if so, how will I deal with the 2007 1099-S on the 2007 return? Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted September 25, 2007 Report Share Posted September 25, 2007 Sounds like this might have been a 'land contract' sort of deal, where the 'buyer' just made payments on contract until such point that an actual deed was transfered, perhaps at a specified number of payments. This is often done where the buyer is not credit-worthy enough to get normal financing until he has enough 'down' to satisfy the lenders. Until the closing, if he defaults, the payments made are treated as rent, usually, and that is the end of it. No need to foreclose, etc. It that is the case, you could treat the payments as rent in 06, or you could set up an installment sale in 06, which would be my choice since you know that the deal did go through. On the 07 return, you can note the sale on Sch D, if you wish, zeroing it out and referencing the installment sale. Quote Link to comment Share on other sites More sharing options...
RitaB Posted September 25, 2007 Author Report Share Posted September 25, 2007 Sounds like this might have been a 'land contract' sort of deal, where the 'buyer' just made payments on contract until such point that an actual deed was transfered, perhaps at a specified number of payments. This is often done where the buyer is not credit-worthy enough to get normal financing until he has enough 'down' to satisfy the lenders. Until the closing, if he defaults, the payments made are treated as rent, usually, and that is the end of it. No need to foreclose, etc. It that is the case, you could treat the payments as rent in 06, or you could set up an installment sale in 06, which would be my choice since you know that the deal did go through. On the 07 return, you can note the sale on Sch D, if you wish, zeroing it out and referencing the installment sale. Thanks, KC, I agree with your suggestion. I hope you and your family are well; I've been praying for you! Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted September 26, 2007 Report Share Posted September 26, 2007 Thank you. Quote Link to comment Share on other sites More sharing options...
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