What is Owner Financing?
Owner financing is a transaction in which the seller finances the purchase directly, either in whole or in part. These transactions can offer the seller monthly cash flow that provide a better return than fixed-income investments.
Tax benefits: Sellers receive monthly payments for their business, drawn out over months or years. Essentially, the seller offers a loan to buyers that covers a portion (or all) of the total purchase price of their business. In turn, buyers repay the seller in installments, with interest.
Reporting such incremental gains as opposed to large lump sums has tax benefits, including lowering income taxes (in comparison to a lump sum). Seller's financing typically runs only for a fairly short term, typically five years, with a balloon payment due at the end of that period.
Tax benefits: Sellers receive monthly payments for their business, drawn out over months or years. Essentially, the seller offers a loan to buyers that covers a portion (or all) of the total purchase price of their business. In turn, buyers repay the seller in installments, with interest.
Reporting such incremental gains as opposed to large lump sums has tax benefits, including lowering income taxes (in comparison to a lump sum). Seller's financing typically runs only for a fairly short term, typically five years, with a balloon payment due at the end of that period.
