Catering to Seller's Capital Gains

[Chris Battaglia]

I've got an opportunity to acquire a large piece of raw land from a seller, but there are a few things that don't sit right with me. He bought the land for much less than I'm paying (still a great deal) and is concerned about capital gains. As a result, he will only spread the sale out over 3 years for tax purposes (1/3 due each year). This isn't ideal, because I'd imagine the bank will not loan on this property for new construction until it's in my name. The second issue is that he wants to seller finance the property at 4-5% (great rate) during this period. Great rate, but I'm effectively paying interest that isn't necessary due to having the cash to buy the property outright. I suppose I could put the funds in a high yield or something to cover the interest, but I'd really just like to buy the property in full and move on. Any deal structure ideas that would be a compromise for us both?

[Steve Vaughan]

@Chris Battaglia  I'd probably propose seller-financing for 3 years with a note and deed of trust that he agrees to subordinate or be in 2nd position when you get a construction loan or mortgage. 

With a note and DofT / Mortgage from the seller, it will be in your name and he still gets to spread out the tax hit with an installment sale. 

A back-up 'option' might be an option to buy, with the consideration spread out as a chunk this calendar year and next.