Quote from @Andrea Burke:
Hi all,
My questions are about "seller financing".
There is a house in my neighborhood that has sat unoccupied for 10+ years since the owner moved out due to black mold. We are not seeing a mortgage on this house. We are thinking about making her an offer, and we are curious about seller financing.
* How does it benefit the buyer when the owner carries the loan?
* How does it benefit the owner to carry the loan?
* We have heard that this is a way for the owner to avoid "Capital gains"?
* What happens if the owner carries the loan for us, and then we later sell the property to someone else? We know that we would then pay her off, but would she then have to pay capital gains?
Cheers!
Hello Andrea
How does it benefit the buyer when the owner carries the loan? The buyer may want to reduce the down payment required to buy a property, preserve capital, increase yield, reduce payment on the loan for a period of time.
How does it benefit the owner to carry the loan?
The individual owner of a seller financed mortgage enjoys a notable advantage over a traditional financial institutions, direct one on one negotiation capability with the borrower. its an advantage for negotiating new terms, adjusting interest rates, and addressing unforeseen issues.
We have heard that this is a way for the owner to avoid "Capital gains"?
I wouldn't call it avoid but more like preserve capital.
What happens if the owner carries the loan for us, and then we later sell the property to someone else? We know that we would then pay her off, but would she then have to pay capital gains?
This will vary based on the owners specific situation and tax regulations in your area. Generally, if the owner sells the property at a profit, they might be liable for capital gains tax on the gained amount. Seeking advice from a tax expert is recommended for tailored advice.
