Clarification on Seller-Financing (Seller perspective) NOT tax advice
Hi, I browsed the forums looking for details; forgive me if this question is a duplicate but I couldn't find it anywhere on the forums.
* Does anyone have a loose idea of how a Seller pays gains taxes on a Seller-Financed property?
I have an accountant but usually get a negative and cut off response "don't do it" or something similar. I can't seem to clarify if the gains to seller are delayed across the years of the ammortization period, or perhaps there is another formula applied. If anyone has insight, please let me know. Any replies are Not tax advice and I would gladly confirm with tax professional later.
I have 2 separate properties I'm considering seller-financing, but I stoip short of pursing as I'm not sure whether it makes taxes more complicated than a regular sale. Thanks in advance!
Most Popular Reply
My understanding is that the gains are declared as the seller receives them (delayed across the years . . .) One of the reasons sellers like to hold the paper!
AI Overview
"Holding paper" (or seller financing) is a real estate or business sale strategy where the seller acts as the lender, allowing the buyer to pay the purchase price over time rather than securing a traditional bank loan. The seller retains a note secured by the property, collecting interest payments and potentially deferring capital gains taxes.