Advantages of Seller financing (to a seller)

Financing, Hard Money Lenders, Private Money
1

I am going to look at a house this weekend that is not on the market. I wrote a letter to the owner back in October, and got a nasty call back. Last week, the seller’s daughter called back and said her mother’s situation is changing.

I spoke with the owner and asked about the possibility of her financing at least a portion of the sale price…she said she would need to think about it.

I have thought of some advantages for the seller in a seller financing situation such as: potential for higher sale price, no real estate commission, reduction in capital gains tax over $250K, possibility for a higher interest rate.

Can anyone give me any other good bullet points to explain how this might be a win-win situation? I appreciate the help! Thanks!

2
  • Long-term revenue stream
  • Capital gains are only paid as they accrue

Keith

3

Thanks Keith! I have seen some of your other posts and hoped you would be one of the replies.

One question on capital gains tax though…What will the seller need to do for tax purposes (eg: Will the income from a monthly mortgage payment be treated the same way as a landlord receiving rent? Schedule E?). Thanks again!!!

-Brian

4

Capital Gains are reported on 1040, Schedule D:

http://www.irs.gov/taxtopics/tc409.html

Consult a tax professional or the IRS for accurate advice!

Keith

5

Hi there. Just a word of advise for you—Banks do not like that set-up especially when it’s time to refinance. Find lenders that would take the loan you are referring too and see what happens. Best of luck.
John