Tax gain on sale question for commercial property.

[Joel Owens]

Getting feedback on a situation.

Transaction of 4 million and buyer is putting down a certain percentage. Seller is agreeing to carry back 5% second of 400k fixed with a 30 year amortization for 2 years.

Sellers comment to listing broker is they are worried that total price at closing will cause them to realize a gain on the 400k note they are taking back even if they have not collected it yet.

Seller would be 1031 exchanging remaining sales proceeds. The feedback so far is that the gain would not be realized until each note payment is made per month.

Seller I am sure will run this buy their accountant but was wanting to see what other thought.