Buying seller finance deal and tax implications for inheritance

[Jacob Michaels]

Hello all,

I'm talking with a seller who is fairly motivated as she is quite elderly (even has a great great grandson). She owns a few properties, each worth about $100,000 and is thinking of selling them. She owns them free-and-clear, so although she wants cash I think seller financing could be a possibility.

My question is how can I pitch her the benefits of seller financing for her situation? She has a will and her grandson is the executor. She is planning on giving the proceeds from the sales to her heirs.

I would like to find a way to explain the pros and cons of selling a house traditionally (for cash, from her perspective), and with seller financing (again, from her perspective). If she sells for cash, she'll be hit with capital gains of 15%, from what I understand. I want to use that somehow to persuade her towards the seller financing option.

I heard there is some kind of $10,000 gift limit that one can give their family members each year. If I were to structure a sale with some interest paid to her each year, and she were to receive let's say exactly $10,000 as income, could that $10,000 be given directly to one of her heirs either before or after she passes and could it pass to them tax-free?

I'm not sure if my question makes sense or not, but I hope you understand what I'm getting at, in trying to explain the tax advantages of owner financing versus the seller selling for cash.

I really appreciate anyone knowledgable taking the time to reply in advance!

Jacob