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In December, 1998 my wife, her sister and I purchased a house for our neice(the sister's daughter) and her husband. We did this because they could not qualify for a loan.

This was a $50,000 house. Downpayment and Closing costs were paid by us and were about $15,000, leaving a loan of about $37,000.

We are letting them make the mortgage payments (routed through my wife's sister to make sure they are timely).
They are also paying an extra $100 per month to retire the 'no-interest loan' of the $15,000 downpayment/closing costs.

Some time, 5-10 years from now, when they can qualify for a loan themselves we will sell them the house for the residual value of the two loans.

No one is planning to take any mortgage interest deductions.
We do not want to treat this as rental property with depreciation and other stuff.

TAX QUESTION: Is there any need to report any of this on our tax returns ?
(Mainly worried about the extra $100/month to pay off the downpayment 'loan').

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