💰 How Owner Financing Can Reduce the Tax Hit When You Sell Your Auto Repair Shop

When most shop owners think about selling, they focus on the sale price — not the tax bill that follows. But here’s the truth: if you sell your business and property for one big lump-sum payment, you’ll likely owe capital gains tax on the entire profit that same year. Depending on the size of your deal, that can take a serious chunk out of your retirement or next investment.

That’s where owner financing — also known as seller financing — can make a big difference.

⚙️ How Owner Financing Works

In an owner-financed sale, the seller acts as the lender, allowing the buyer to pay a portion of the purchase price over time, typically with interest. Instead of receiving 100% of the sale price at closing, you might structure it like this:

• 60% SBA or bank-financed

• 25% owner-financed note

• 15% buyer down payment

  
  

This means you get a lump sum upfront, then monthly payments over several years. From a tax perspective, this can be powerful. You’ll only pay taxes on the money you actually receive each year, not the full sale amount all at once.

That can:

• Spread your tax burden over several years

• Help you stay in a lower tax bracket

• Generate steady interest income along the way

  
  

This type of arrangement is often called an installment sale, and it’s recognized by the IRS as a legitimate way to sell a business.

🏁 Why It’s a Win-Win

Buyers like it because it makes financing easier and keeps them motivated to operate the business successfully. Sellers like it because it smooths out the tax impact, keeps money working for them through interest income, and makes deals close faster.

At RPM Shop Sales, we see this structure in roughly one out of every three transactions. It’s a tool that can create real flexibility and attract stronger, more qualified buyers.

⚠️ Important Disclaimer

I’m not a CPA or tax advisor — and this article isn’t intended to be tax advice. Every seller’s situation is different. Before deciding how to structure your sale, it’s critical to speak with a qualified CPA or tax professional who understands business transactions and installment sales.

A good advisor can help you confirm whether owner financing fits your tax strategy and ensure your deal complies with IRS rules.

🧰 Final Thoughts

If you’re thinking about selling your shop, don’t just focus on the sale price — focus on what you’ll actually keep after taxes. Owner financing, when structured properly, can help you close faster, attract more buyers, and maximize your net proceeds over time.

At RPM Shop Sales, we specialize in helping Texas shop owners structure deals that make financial sense — for both sides.

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Let’s talk about your goals, your numbers, and how to make your sale work smarter.