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Is there a creative way to structure a deal such that the taxes on a free & clear house stay as low as possible for the buyer (and improve the seller financing cash/month to the seller)?
For example…
The seller currently pays $1,100 in property taxes per year. Current tax rate for the property is 1.4%.
The property is worth $600k today, and market rents are in the $2200-$2300/month range.
Seller financing is an option, and if we agree on a price of $600k for 30 years @ 0% interest, the payment to the seller per month ~= $1667 per month.
If the tax rate stays the same, but the tax basis (I believe this is the correct term) changes to $600k, then taxes would be $600k * 1.4% ~= $8400/year ~= $700/month.
Given the above the monthly payment is appx. $2367/month (or $1667 + $700), just principal, interest and taxes alone, without taking into account insurance, and more importantly, profit.
Is there a better way to structure the terms of the seller financing note with the above variables? Or is there an alternative to taking title (e.g. in a land trust?) to keep the tax basis low and still make the deal work for the seller?
do NOT buy it!
Remember you do not need to own a property to control it and all it’s cash flow and equity
It would be much better to just master lease this property. maybe get an option. maybe not. the option is not necessary.
no sale, no change in taxes! But you control the cash flow with a master lease without the headaches of ownership
plan B…
who says 30 years is the magic number? You can do seller financing for 40 years, 50 years, 100 years, etc.
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