Terms Deal

Hi folks,

My question regarding doing terms when you purchase a house for what the seller is asking, is it possible to pay the seller their equity in installments?

For example, and these are arbitrary numbers:

Asking price $500,000
Their mortgage balance is $350,000

Equity = $150,000

Can you offer them that you will pay them what they are asking except that you will pay them their equity $75,000 after 1 year, then the other $75,000 after the 2 year. So basically, you are buying the house for $350,000 at the close of escrow so that the seller can pay off their bank but then I am paying them their equity in 2 installments.

If you can pay the seller their equity in installments, what are the tax consequences for both myself and the seller? If the seller has been living in their house for 2 years or more, they have no capital gains tax to pay but I don’t know how that would work if I end up paying them their equity in 2 one year payments.

I hope I explained this clearly.

Thanks.