Taxes From Sale / Buyer With No Money Down
Hello,
I have this question.
I am selling a property. And we have to pay the taxes on difference between purchase price + fixing price + closing price and selling price.
Lets say (as an example): We paid 50,000, fixed for 10,000, sold for 100,000 and paid about 10,000 in closing/real estate expenses. So we have to pay taxes on 30,000 - this is clear to me.
The buyer offers to buy for 105,000 with us paying 5,000 toward closing cost. The total amount will be the same - 100,000. Does taxes will be the same? Also, what is the reason for him to offer this?
Thank you for your time.
Yes, your net profit in the scenario you describe is still $30K and your tax liability will be based upon that number.
A higher purchase price means a little larger mortgage loan, and with you paying the closing costs, the buyer brings less of his own money to the settlement table.