Deal question? Seller wants cash at closing on bank financed deal?

I am in negotiations on a park, and the seller is asking for cash at closing to help reduce the capital gains tax on the deal. The cash will go to nothing as this is going to be a deal financed by the bank. Is this something that is normal? and can it even be done legally? (I understand no ones advice is legal advice and I should contact a lawyer)…just curious about peoples thoughts.

Perhaps I am misunderstanding the question, but it seems the seller misunderstands how real estate closings work (either thru escrow companies or lawyers depending upon your state). Unless you were to hand the seller cash in a parking lot late at night any real estate transactions goes thru an escrow/title company or lawyer. They will receive and hold the bank’s money until all parties sign and the deal is recorded. They then give the seller his proceeds, usually via check or bank transfer. If seller asks THEM for cash I’m sure they will say “ya know, we don’t keep hundreds of thousands of dollars in our petty cash drawer so we gotta send ya a check”. In any event that part of the transaction is not your concern. They won’t release funds to the seller until he gives them his social security number and they are required to send info to the IRS that they just gave Mr. Seller a bunch of money, cash or otherwise.
Hope that helps

No your correct, they want cash from me…maybe meet in a parking lot, but nonetheless. I was like this isn’t how this works, but it was so off base that maybe I was wrong about something. thanks for the response… Currently trying to negotiate the cash they want as a downpayment for the single family house that goes along with the deal. and owner finance the house that way it breaks up the capital gains a little bit for them.

This type of deal is illegal in my state, not sure about others - but it’s seen as construing the purchase price as a means to keep the tax rate lower for purchaser and capital gains lower for seller as logged by the Title company. Don’t implicate yourself by dealing with this seller.

Theoretically he could sell you a bunch of “personal property” on the side for X. It’s not inconceivable he’s trying to hide money from a partner.

Oh, I get it now, in addition to a traditional escrow company closing he also wants some “secret” money in a plain envelope with unmarked bills -lol. As that changes the bank’s underwriting that they used to give you the loan that could indeed be viewed as bank fraud. You could then tell your cell mate all about your real estate empire. (Another little joke). As mhp said you could buy some personal property outside of escrow. $7,000 hammers and a $9,000 wheelbarrow would still look like fraud though. The bank or some defrauded partner may tie you up in civil/criminal court for a long expensive time.

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