All Forum Posts by: Ali Mol

We signed a lease-to-own contract for 60 months. At the end of the term, we are obligated to provide a $100,000 credit at closing toward the purchase price for the buyer/tenant. This credit amounts to $1,666 per month, with the monthly rent set at $3,300.

From an accounting perspective, should the $1,666 per month be treated as a liability (deferred credit) and excluded from income, or should it be recognized as income and then applied as a credit at closing?

This property is owned by a multi-member LLC.

Quote from @V.G Jason:

Why are you entertaining seller finance and why are you expecting the buyer to be okay with a current note on it?

 I'm not quite sure what you mean. However, I am not considering a "land contract" financing option. From my point of view, this approach is too risky in Florida. My plan is to pay off the current mortgage and lend money to the buyer.

Quote from @Tom S.:

@Ali Mol  Just curious did you end up pursuing this strategy, or do something else in the end?

I listed the house on the market with my agent, and while he checked the "Owner finance" option, we have never received any inquiries about owner financing. I asked him to add that to the MLS description, which seems to have helped a lot because now I can see it in Google search results, Zillow, and other platforms. On the other hand, in our area, the market seems to be slow, and both end buyers and agents (including builders who are offering up to 6% commission) are more inclined towards purchasing new houses.

I have thoroughly reviewed Publication 523; however, it does not address the specific question I have. The scenario involves a couple who have decided to sell their property to leverage the advantage of the capital gains tax due to their residency for over 2 years within the past 5 years( purchased property in 2014 , convert it to rental in 2021 and rent it for 23 months) , alongside fulfillment of all other eligibility criteria outlined in IRS Publication 523.

Given this context, if the couple transfers the property deed to a LLC company, with the husband owning 51% and a third party retaining the remaining 49%, would this transaction still be excluded from capital gains tax? It is important to note that the husband's retention of the 51% share is a requirement from the bank to maintain the current mortgage at an exceptionally low rate. Your insights into this matter would be greatly appreciated.

I am planning to sell my single-family home (SFH) with seller financing in St. Augustine, Florida. I have done some research and learned a lot from this forum. Based on comparable sales, we are targeting an asking price of $430,000 to $435,000. The property was previously rented for $2,600.

Currently, I have a remaining balance of approximately $275,000 on my current conventional mortgage, which has a term of 30 years and an interest rate of 3.25%. I am considering offering seller financing with a minimum down payment of 25%, an amortization period of 30 years, and a balloon payment due after 5 years.

I have also learned from this forum about note/mortgage servicing companies and have started looking for the best one to meet my needs.

I am aware that the interest rate on a 30-year conventional mortgage is tied to the 10-year Treasury note (for 80% loan-to-value ratio, it is +2.9%). However, I am unsure about what would be a fair interest rate for seller financing and how it might change based on higher down payments, Is it normal to use the prime rate or a comparable rate for a conventional mortgage?

My lawyer has informed me about the option of a "land contract" with an underlying mortgage and the associated risk of the mortgage company calling the mortgage. In this market, do you think it makes sense for any buyer to take on this risk?