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North Central Kansas | No there is no Rent to Own for land. You can deduct rent 100% on your taxes. If you tried to do something like this you would end up with no base in the ground as your payments would all be considered rent. May not be an issue if you plan to never die or sell the ground. At some point there would be a day of reckoning when you would have to establish a value. I am sure at that point the IRS would be more than glad to help you establish a value and how much taxes you owed.
There is no way around buying land without paying income taxes on the prinicpal payments. At least that I know of.
A land contract is essentially a private loan between the buyer and seller. There used to be tax incentives for sellers to do these as it spread there taxes over several years. I have heard some that were done this fall that the tax guys are telling the sellers to show all of the income in 2012 and pay the tax at this years rates.
The buyer under a land contract makes there payment and it is split into principal and interest just like a loan at a financial institution. Typically they are "escrowed" at banks or title companies who receive the payments and disperse the funds. They also report the interest paid to the IRS.
Edited by kstate90 12/14/2012 08:07
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Rent to Own
