Sub2 - Seller Proceeds - Taxed as Cap Gains?

[Jesse Crawford]

Morning BP Fam! I am working through my first subject two deal and one objection that I've not seen covered is how the proceeds to the seller / homeowner are taxed. My assumption is that since the deed of a property is changing hands that Uncle Sam would still view this as proceeds from the sell of a property. I'm hoping to have a CPA with experience with sub2 might weigh in.

Thanks in advance and best of luck!

Jesse

[Randy Rodenhouse]

If this is the owner occupied property then they have the exclusion of $250,000 you're single or $500,000 if married if lived in the property to the last five years. It's a house is an investment property then they will pay capital gains tax rate on any profits if they have held the property for over one year. However if there are no profits and you are just taking the loan subject to the existing debt then there is no tax.