Thursday, May 25, 2006
Seller Financing-(or take-back loan)
Many sellers are taking back a loan when selling their property. The reasons are not to help the buyer, as it was in the past. Now, with the large capital gains sellers are experiencing, they can spread out the gain to minimize the capital gain tax burden and even avoid some of the tax. If you live in your property for 2 years or more and have a gain larger than the allowed deduction, you will find yourself paying capital gains tax. The deduction is $250,000 for singles and $500,000 for married sellers. In addition, your property may sell quicker if the interest rate you charge the buyer is just below market and what the buyer can get their financing for.
