I am considering asking my landlord to do a contract for deed for the home I rent. He originally had it for sale by owner and then decided to rent it because it wasn't selling. We didn't think we would stay in the area but now are having a change of heart. Our credit is bad so we would have difficulty getting a conventional loan. We have done a lot of improvements to the property and continue to do so. I hate that we wouldn't benefit from the enhancements we have made and would like to. What would be the best way to approach the owner to consider this as a selling option. We have always paid him on time and will continue to do so. Thanks for any ideas, etc.

Hello m:

The farthest thing from your mind is how to do your taxes IF you can make a deal... Making the deal should be first and foremost...

I'd try a lease option first... It would be a better deal for you, and works about the same as a land contract... The difference is that at some predetermined time in the future, you WILL buy the house. In a land contract, you actually won't BUY the house until the END of your contract.

In a lease option, your landlord takes a portion of your rent and attributes it to a down payment... When that account is built up enough, he SELLS you the house and takes a mortgage. THAT would be ideal for you.

excon

To answer the question posed in the title of this thread: you can deduct mortgage interest IF the home is your primary or secondary residence and if the mortgage is a secured debt. From IRS Pub 936:

You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that:

- Makes your ownership in a qualified home security for payment of the debt,
- Provides, in case of default, that your home could satisfy the debt, and
- Is recorded or is otherwise perfected under any state or local law that applies.

You can also deduct the real estate taxes that you pay.