What gets reported as income on a Seller Finance de

[Dave Godfrey]

Hi everyone!

On a seller finance deal, what does the seller report as income? Is it upon the sale of a property... or is it on a Cash basis, that is, only when cash is actually received?

For example:

Purchase Price: $100k (original transaction)

Purchase Date: 1999

Seller price: $300k but will finance $150k over 10 years. Thus, the Seller receives $150k down now... but then $15k per year for 10 years.

Does the Seller pay tax as they receive the cash? Or does he have to report a profit of $200k ($300-$100k) upon the today's sale?

Thanks,

Dave