I need to file a lien with the county so that I can deduct interest yearly off my taxes. Can I do this relatively cheap without hiring someone for the documents?
With the amount of money involved here, you would be well advised to pay a little to save yourselves in the long run. A lawyer with real estate experience should be able to do the job for a very reasonable fee. You should be able to get an idea of that fee in advance. If they cannot provide an estimate, then there are others that will.
I was able to close on a house for under $200 in fees because I did my own title search and arranged my own financing.
Be warned, if you don’t get title insurance, then you may find that other people have liens on your new property. That would create a whole new mess as you would be responsible for those debts.
Also, there is a minimum interest rate that he is allowed to charge before the loan is treated as a mortgage.
Spend a couple of bucks and do it right.
Call the county recorder and ask.
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You don’t file a lien on your own property – the lender files a lien. You’ll need to make sure you have a legal loan and can document the payments including the interest amount. And that interest will have tax implications for your father. I suggest you get professional help in setting this deal up.
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You’ll need to file a quit claim deed.
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you simply sign a promissory note and mortgage in favor of your father. he records the mortgage with the County Clerk, which puts a lien on your property until paid in full.
keep an amortization shedule showing principal and interest paid. you deduct the interest; your father shows the interest as income.
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With the amount of money involved here, you would be well advised to pay a little to save yourselves in the long run. A lawyer with real estate experience should be able to do the job for a very reasonable fee. You should be able to get an idea of that fee in advance. If they cannot provide an estimate, then there are others that will.
I was able to close on a house for under $200 in fees because I did my own title search and arranged my own financing.
Be warned, if you don’t get title insurance, then you may find that other people have liens on your new property. That would create a whole new mess as you would be responsible for those debts.
Also, there is a minimum interest rate that he is allowed to charge before the loan is treated as a mortgage.
Spend a couple of bucks and do it right.
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I agree with src50. Whatever the interest rate your father will be charging you. Order an amortization so you’ll have a break down between interest/principle. You can either call a realtor to do it for you or just type in amortization and it should take you to a sight that will give the breakdown. Most realtor will charge about $25.00 to do it for you
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You can’t file a lien, your father has to.
To keep things legal, you need to have a licensed attorney to draw up a note. Your father cannot draft a real estate mortgage note without being a licensed attorney.
The note will be signed by you and your father and will make a provision for payment.
This process need not be expensive. Just be sure to use a licensed real estate and NOT a general practice attorney.
Then the attorney files the note as a lien against the property. Your father must create and send you an IRS Form 1098 and he will be required to report the mortgage interest as income in order for you to receive the tax deduction.
If your father is unwilling to do that, then you cannot receive the tax deduction.
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This will be part of your escrow procedure when you close escrow on the property. They will need to know how you are financing your purchase & they will then implement the proper documents. You will be on the Deed and your father will be the Promissory Note holder.
Your father will additionally be responsible for the IRS reporting for the interest and providing you with a 1098 for the interest.
There are "usury" laws for each state that will provide the amount of minimum and maximum amount of interest that is allowed depending on the length of the contract.
As an alternative, you and your father could have the payments directed to a "contract collection" agency and they will take care of it for an annual fee.
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