How Do I Owner Finance My Home
I have a house that is paid for and would like to owner finance it to my son. Is there an easy and legal way to sell him the house? I estimate the house to be worth about $100,000 while I paid about $20,000 35 years ago. Any ideas about capital gains taxes and types of contracts neede, and con I sell it to him for less than appraised value?
Thanks
Hello, your attorney will likely have the state specific contracts for you for purchase and sale, the promissory note, and the mortgage or trust deed, depending on your state.
If I were you, I would take at least 5% from your son, or 10% is better, IF at some point in the future you want to sell that note for a cash lump sum to an investor.
Your face rate should be somewhere between 7-9% if you want to make it marketable as well.
Selling this way should help to mitigate capital gains taxes, rather than getting a lump sum at one time, but you need to consult a CPA on that issue.
also, sell it via owner financing and not contract for deed, since you own it outright, since there are no underlying loan payments to consider wrapping.
Good luck, hope this helps, Dave
Dear retired:
Is this a rental house or your home?
Will he be living in it?
What is your goal in selling for less than appraised value?
I wanted to help him get a little ahead with the equity so some time in the near future he could sell the house and move to an area closer to his work. I am not really interested in renting.
Quote:
On 2004-11-28 18:01, ceinvests wrote:
Dear retired:
Is this a rental house or your home?
Will he be living in it?
What is your goal in selling for less than appraised value?
What do you mean by face rate?
Is this your home that you want to sell to him
OR
is this a house that you have owned as an investment property?
I ask because the taxes that you would owe would be different if you are selling your home that you have lived in for 2 years OR if you are selling him a house that you have used as an investment property.
Several years ago my company sent me to another state to work, expecting to come back to my house I asked my son to move in and take care of the place. When I returned I decided to buy another house for my retirement in an area more suitable for me. So to answer your question, it is not currently my home but not investment property either.
Retired
Quote:
On 2004-11-29 00:26, ceinvests wrote:
Is this your home that you want to sell to him
OR
is this a house that you have owned as an investment property?
I ask because the taxes that you would owe would be different if you are selling your home that you have lived in for 2 years OR if you are selling him a house that you have used as an investment property.
face rate=interest rate on the loan
Retired,
Based on what I see so far in this thread my advice is go find yourself a good general practice attorney. There are lots of issues here. All of them are manageable but all of them have complications and considerations. Its not worthwhile to spend the time to sort them all out if you are only going to do this one transaction. Spend a few hundred bucks with an attny and let him put this together for you.