Author Topic: Seller Financing From An Older Seller  (Read 840 times)

jmoney

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Seller Financing From An Older Seller
« on: August 12, 2014, 04:46:33 AM »
I am working with an older seller (62 years old) on social security. He wants to sell his triplex to me because he is still doing all the work himself without contractors or a property manager. He owned the building since 1980 so no depreciation is left and any sale proceeds will be taxed. He also wants to avoid any deal that would affect the amount he receives from social security since that's free money to him. So I'm looking to construct a deal that gives him the most money net in his pocket after tax. He is willing to finance the deal since he wants the cashflow.

Option A
A very low sales price but very high interest rate to effectively pay him the same amount as if I bought sold the property at more reasonable terms.

Option B
A slightly below market sales price but zero percent interest.

I think option A is the best way to go because it will slowly pull out his share of the property to avoid a big hit on capital gains tax all at once. I also understand that interest income is not earned income so it won't affect his social security benefits. Is this true and is there anything else I should be aware of?