Selling House With Cash Back

davese profile photo

I have ahouse I am selling and the buyer wants to get cash back at closing. I am selling him the house for 131K and he wants the contract at 150K.



Tax wise, will I owe taxes on the diff between what I bought it for and the 150K even though he is getting cash back of 19K?



Also what about the legal aspects of this, is that even legal to do?



Thank you

Comments(1)

  • JohnLocke12th June, 2007

    Nuetrino,

    In the scenario you described I can see this happening.

    The Buyer defaults on a Installment Contract Agreement with a Balloon Note attached.

    First would the Buyers payments be based on $180K or $200K, then when the Buyer takes the seller to court for the return of his $20K deposit, which is most likely to happen for this amount of money.

    I would not like to explain to a Judge on why this was a deposit rather than a down payment as the first thing that may come to the courts mind is tax evasion being the reason.

    Yes, we fancy ourselves as being creative, but there is a line that one must take to make sure we are not crossing the fraud line.

    John $Cash$ Locke
    [addsig]

Add Comment

Login To Comment