Seller Finance 0% Rate Question

[Eric Imhof]

I'm currently working on getting a triplex deal across the finish line. Seller wants to do owner finance, and has given me discretion on terms. All I need to do is have a final number that totals $550k (a high price for this home)

I was looking at doing 0% interest, 30 yr amortization, with a 10 yr balloon. It would give me a low payment, and gets her the sale price she wants. The overall number is what matters to her most. My biggest concern here was the imputed interest, and making sure I'm being fair to my seller.

I'm considering instead to ask her to do a sale price of her basis + 250k (she's single) so she can avoid capital gains (she has lived in the home a long time). Then I'd take the difference of that and the $550k and work that as interest. I'd ask for interest only payments to keep my monthly payment low. Her basis is $154k original purchase + work done on the house over 20 years.

If the sum of her basis + $250k is equal to the $550k I need to get her to, then would I be able to do this as a 0% interest purchase, 30 yr amortization with a 10 year balloon, and avoid that pesky imputed interest because I'd be within that basis + 250k range? Or would imputed interest still apply? Thanks in advance for the help!