Sale of home

Forum|Forum|1 year ago
February 22, 2025
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My client purchase a home through a seller finance. After making payments for 6 years they asked for a loan from the seller for repairs on the home. The seller is wanting my client to pay his capital gains on the sale of the home. Can he do that?

MongrayAuthor

Ok really my question is does the amount of the repairs loan get added to the amount sold?

KrisD15

I'm not sure I understand the question.

Who sold the home?

Are you saying that the Buyer had a loan from the Seller, then took a second loan and then what? Bought the house from the original Seller and paid off those two loans?

So if the Seller originally purchased a house for 100,000 and gave the Buyer a 200,000 loan, then gave the Buyer a 25,000 loan for repairs and then the Buyer pays off the loans and gets the house free and clear, the Seller sold the home for 200,000.

No, the amount of the repair loan was not part of the purchase between the Seller and Buyer. It was an additional loan made after the fact.

The Seller would claim Capital Gain on the originally agreed sales price, in the example 200,000.

The Seller would claim the interest on both loans as income.

The basis for the Buyer would be 225,000 if the 25,000 was used for improvements. If the 25,000 was just repairs and maintenance, the Buyer's basis would only be 200,000.

If I am not understanding, please continue the question.

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