Promissory notes are valuable financial tools. Unfortunately, they are underused because they are not understood. They have 12 or more important uses, including:
- Hold for investment income
- Hold in a tax-free or tax-deferred IRA account for income
- Sell for cash
- Exchange for real estate
- Use as a down payment on real estate
- Use as security for a loan
- Use to repay a debt
- Use to make a gift
- Use to reduce taxable income
- Use to divide assets in a business or domestic settlement
- Each of the note’s payments can be sold – partially or in total
- A note’s balloon balance can be sold – partially or in total
Depending on the note’s characteristics and your goals, many possibilities exist to improve your financial picture.
Source: Lawrence(Larry) Tepper, www.promissorynoteappraisers.com, as printed in The Paper Source Journal.