I trying to sell my [primary] personal residence with seller financing as a second mortgage. (assuming that I have lived in it for 2 out of the previous 5 years. BTW-the house is only 3 1/2 years old)
Sale price of the property = $349,900
Seller to pay $8500 in closing costs.
Seller will carry a 2nd for $75,000 @ 10.5% amortized for 360 months (interest only) with a 2 year balloon.
This will net us an additional $13,000 and bring in $656.25 a month for 2 years as cash flow from the loan (additional $16,406.25 net over 2 years)
how will this additional cash flow or net profit will be treated from a tax standpoint?
Assuming that the buyer will attain a loan for 80%LTV = the buyers loan will be $279,920.
This leaves me with $69,980. There will be $5020 premium for carrying the second. In essence the buyer will be paying $354,920 for the house with a sales contract for $349,900. The 2nd mtg will be for $75,000 (69980+5020).