Posted by JohnBoy on November 16, 2000 at 15:03:38:
You would be involved with committing loan fraud to the bank and YOU would be paying the taxes on the additional amount and for forgiving the debt.
Tell them if you carry a second, which in that case you WILL expect a higher sales price for giving some terms on the deal, that you WILL expect the buyer to make payments on it, period!
Now you could structure the second to where the buyer would have 0 interest and 0 payments for the first year or two and then have the payments kick in, OR, you could agree to take payments on the second with 0 interest, but you will be taxed based on the full amount of the sale either way.
You could agree to discount the second later for a full payment amount also. Not sure on how the tax situation would work if you discounted a note, although you would be taxed on the full amount of the sale when you sold it.
The way they are proposing to do this is loan fraud since it would be deceiving the lender, requiring the buyer to lie on the loan app. and closing documents.