All Forum Posts by: Adam Nonnenmacher

In 2019 I bought a house, and flipped with owner financing. Since flipping qualifies you as a "dealer", you cannot qualify for an installment sale which means I have to pay gains tax all at once even though I am taking payments.  

How taxes would look according to IRS as a flip
Cost basis: 20,000
Sales price: 34,5000
2019 Taxable income: 14,500

How I feel like taxes should look if I actually made 3k in 2019 and 3k in 2020
Cost basis: 20,000
Sales price: 34,500
2019 down payment: 3,000
Carried note for: 31,500
2020 Note sales price: 23,000 (3k profit)
2019 down payment + 2020 profit from note sale = 6k

So how is this handled? Do I pay tax on the entire $14,500 from the sale in 2019 (according to IRS) or just 3,000 down payment as profit (I assume down payment is pure profit and not a reduction of basis?) then pay the tax on 3,000 from note sale in 2021... this is so confusing to me.

Well done!! I hope to be on that level someday, or get to the level where I can syndicated deals like that. Right now, syndication is way over my head and all the legalities and red tape is just overwhelming. I wish you lived in Dallas, I'd hit you up in a heartbeat for a mentorship. I think BRRRR is one of the most powerful concepts in real estate and underused in my opinion. My new company's sole strategy is going to be BRRRR or but sometimes instead of renting, selling through owner finance. There is a huge need for owner financing in this country.