Capital gains on owner financed home

[Kim Coffman]

If we sell our primary home, which we have owned for over 20, years, would it be subject to capital gains tax if we owner finance?

[Chris Seveney]

@Kim Coffman

If you are making more than the allotted amount yes but it will not be upfront it will be after you exceed your basis and what you can deduct

But on another note, the interest income from the loan is taxed at ordinary income rates - so sometimes it’s better to sell and pay the tax now and invest that money versus having it tied up in the property and taxed slowly over time where tax rates are probably only going up in the future