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February 25, 2025
Question

Can I receive a credit if I live on land lease property?

  • February 25, 2025
  • 1 reply
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A land lease credit is listed in our newsletter

    1 reply

    KrisD15
    February 26, 2025

    If, by "land lease" you mean "Ground rent, it's possible that some payments can be treated like Home Mortgage Interest. 

    The newsletter might also be referring to some sort of state credit. 

    I suggest you ask whoever wrote the article for more details. 

     

    According to the IRS:

    "Redeemable ground rents.

     In some states (such as Maryland), you can buy your home subject to a ground rent. A ground rent is an obligation you assume to pay a fixed amount per year on the property. Under this arrangement, you're leasing (rather than buying) the land on which your home is located. 

    If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest. 

    A ground rent is a redeemable ground rent if all of the following are true.

    • Your lease, including renewal periods, is for more than 15 years.
    • You can freely assign the lease.
    • You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount.
    • The lessor's interest in the land is primarily a security interest to protect the rental payments to which they’re entitled.

    Payments made to end the lease and to buy the lessor's entire interest in the land aren't deductible as mortgage interest.

    Nonredeemable ground rents.

     Payments on a nonredeemable ground rent aren't mortgage interest. You can deduct them as rent if they are a business expense or if they are for rental property."

     

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