CPA Question: Sale Vs. Seller Finance

[Nick Buten]

Hello, I’m hoping there is a CPA in BP who can help me explain the 2 scenarios below to a seller.

***The seller has no debt on the property

Offer 1: $375,000 (Bank Financing)

Offer 2: $375,000 (Seller Financing)

- 10% Downpayment ($37,500)

- Loan Amount: $337,500

- 3 Year Term

- 5% Annual Rate

- Guarantee 2 years of IO payments ($16,875 each year so $33,750 total)

Can someone explain the differences in taxes the seller would pay on Offer 1 Vs. Offer 2? I’m hoping to be able to explain that seller financing is not only beneficial from a total return amount but also from a tax perspective (maybe it is not)? Thanks