Owner Wants To Sell Before 12/31
A grandma wants to sell a dueplex to us before the end of the year. She'll hold a 20% note to help us get the loan caus we can't qualify for 100%. Now she is concerned about capital gains tax, and wants to somehow get the 80% payed to her in increments over the next year or two. She thinks this will be easer for her to handle tax wise. A few dozen calls later she is concidering signing a quit claim deed over, and asking how much we can give her at signing.
I guess she needs something dated this year.
Any suggestions would be appreciated.
If you can put down 5% in cash, you can have her sell the home to you via owner financing in such a way that she structures TWO seller financed notes, a first lien and a second lien, and she sells the first lien at close for a cash lump sum so she gets cash at close, and then she keeps the second to mitigate her capital gains tax, as she pays the tax over time in installments.
This way everybody wins, and she can control to a large extent how much cash she wants up front vs. how much she wants paid in increments.
This is a win/win for everybody, but you do need to be able to put down 5%, otherwise this strategy will not work.
Remember, you need to work with competent note brokers who work with competent note buyers to help properly structure the deal.
Hope this helps, Dave
I have a few ideas:
1. You qualify for a loan and have the seller hold back the additional loan. Have the seller agree to pay closing costs.
2. Have grandma go get a loan and take the property subject to the existing mortgage. I'm assuming the property is already an "investment" so there will be no owner-occupied issue.
Either way a good mortgage broker is needed and either way there is no cost out of pocket for you.
Thanks Dave.
Is it 5% of the total sale price of the duplex? Could it be 5% of one of the notes?
Thanks myfrogger,
She has no morgage anymore on this property.
I don't think she'll be interested in obtaining a loan for us to sub 2, plus we don't think it will close before the end of the year. Maybe were wrong. Can all this get financed that fast?