Question: I recently sold for $40,000 a piece of property for which I paid about $10,000 several years ago. The payment schedule allows for three annual installments at 10% interest. How do I report this to the Internal Revenue Service?
Answer: There are two methods for you to report any capital gains from the sale. You may report either the entire gain in the year in which your property is sold or report annually that portion of the payments that represent the capital gains. I advise that you check with a competent tax adviser. Remember that the interest received will have to be reported as ordinary income.
The IRS has a publication called "Installment Sales," available free of charge.
Q: What are the merits of a 30-year home loan over a 15-year one?
A: For some individuals, there are definite advantages to getting a 30-year mortgage. First, many buyers would not qualify for a 15-year loan as a result of the monthly payments being higher.
Secondly, there is no reason why a person who has a 30-year mortgage cannot make it a 10- or 15-year loan by paying more on the principal on a monthly basis.