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How much principal is paid on the property loan each year?

Where does the money come from to pay the balance of the building loan back at sale time if the profit is only $642,940 after taxes?

Answer :

The amount of principal paid on the property loan each year can vary depending on the terms of the loan agreement. In general, the principal payment is a portion of the total loan amount that is allocated towards reducing the balance of the loan. It is typically paid in monthly installments over the course of the loan term.

When it comes to paying back the balance of the building loan at sale time, the money can come from various sources. One possibility is that the profit from the sale of the property is used to pay off the remaining loan balance. In this case, if the profit after taxes is $642,940, it can be used to cover the outstanding loan amount. This could include personal savings, funds from other investments, or even taking out another loan to cover the remaining balance.

It's important to note that the specific details of loan repayment and profit allocation can vary based on the terms of the loan agreement and any applicable laws or regulations. When the property is sold, the money to pay off the remaining loan balance can come from the profit of the sale, personal savings, or other sources of funds. The exact source of the money will depend on the specific circumstances and terms of the loan agreement.

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