what are the tax implications of selling my mobile home if i carry the loan

[Russ Chambers]

i bought it for $1,1250,000

i owe $600,000

I think it will sell for =2,500,000 with a cap rate aroung 7%

$750,000 and finance the rest over 20 years.

Does anyone know what the taxes would look like.

i had benn planning on doing a 1031 exchange in 6 months or so.

thanks russ

[Ashish Acharya]

@Russ Chambers You’ve already gotten some great outlines here, so I’ll just add a little more. Since you’re carrying part of the loan, this is basically an installment sale, which means you can recognize the gain over time as you get paid instead of all at once and that can really help smooth out your tax hit.

With a 1031 Exchange, there is no need for an installment sale for tax reasons, as you are deferring the gain anyway.

In the installment sale, just remember the interest you receive is taxable, and any cash you take that doesn’t roll into a 1031 is considered “boot” and could be taxable too.

One creative angle some investors use is to pair an installment sale with bonus depreciation or a cost segregation study on the new property if you have extra basis for depreciation (assuming you already did cost seg on the old property).

Even if part of the gain from the old property gets taxed with or without an installment sale, you get fresh deductions on the replacement property to offset some of it. So instead of just worrying about your tax bill from the sale, think about matching your gain with new deductions — that’s where the real planning wins happen.

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