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Owned Less Than Two Years |
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I want to sell a house before I have owned it for two years. If I do this, I will have to pay a capitol gains tax. But, I heard that if you can FSBO and owner finance, that this will eliminate that problem. How does the owner finance work? Can I finance the house, but have a realty company take care of all the paperwork and billing and collection of payments. |
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If you take back financing, it means you act as the lender, and collect your sale price over a period of years, with interest. You don't avoid capital gains tax, you just pay it year by year as you collect the money.
If your move is mandated by certain happenings, you can use a portion of that homesellers tax exclusion. A job transfer, medical requirement for a move, unexpected birth of twins, things like that might qualify. A professional tax preparer could explain.
Yes, there are mortgage servicing companies that handle the paperwork when a seller holds the mortgage.
But remember -- at the moment federal capital gains tax is no more than 15 percent, so it's not all that much to worry about. |
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Edith
Originally published on November 23, 2007 |
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