The entire capital gain is often taxed when selling property through traditional means. There can be significant tax savings by using seller financing because the seller won't receive their payment as a massive lump sum from a bank, instead getting it directly from the buyer over time. One of the most common tax reduction strategies is tax timing. Spreading out a lumpsum payment over several years changes your tax brackets and reduces taxes. Sellers who offer owner financing can close on their homes faster, as buyers can bypass the lengthy mortgage process. Additionally, sellers may be able to sell their homes as-is and pocket more money from the sale. In specific cases where the seller's lender agrees to seller financing, the seller uses the monthly payments by the buyer to pay down their existing mortgage. The buyer's interest rate is often higher than the seller's existing mortgage so that the seller can profit from the difference.