Capital Gains When Seller Financing
In this example, I'm wondering how Capital Gains affects the seller.
Let's say I sell a duplex for $1,360,000. The buyer pays $650,000 down and I finance the difference to the buyer. Will I be hit with gains against the $1,360,000 sale price even though I've only been paid $650k and the buyer is paying the rest off over time to me?
I understand there are other factors and exemptions to consider, I'm just giving a basic example.
Most Popular Reply
- Qualified Intermediary for 1031 Exchanges
- St. Petersburg, FL
- 9,636
- Votes |
- 9,371
- Posts
@Colin Williams, the owner financing will act like any other mortgage. the seller is buying 1350000 for $650 down and a mortgage (to the seller) of $700K.
IF the buyer has sold his property for 1,350,000 then they need to purchase at least 1.35 in replacement real estate. And they need to use all of the proceeds from the sale in the next purchase. So the 1031 sale was for 1.35 and the cash proceeds are $650K.
He is purchasing a property worth 1.35 and using $650K in proceeds. That works for his 1031.
- Dave Foster
