2 Parcels (3 units) Owner Financing Questions

[Brandon Sok]

I am looking to purchase a package of properties in Ohio. The owner is interested in owner financing but has questions about the tax implications for him and how the gains would be handled.

Details: 

• 2 parcels
  • 1 single family home (worth approx. 80k) has 60k in equity
  • 1 duplex (worth about 100k) owns free and clear
• Wants to sell both as a package

Lets say I offer to buy for 170k with following terms:

• 20 Years at 5%
• 5k down

What will he pay on capital gains each year? What other details pertain to his tax liability?

Thanks!!

[Thomas Castelli]

His capital gain cannot be determined without first knowing his tax basis in each of the properties.