Seller financing on STR

[Matt Silverstone]

I found a seller who has been managing a STR since purchase on April 2022. They put 10% down and spent $$ on furnishing. Seller still has a loan with the bank. He is looking to sell and do a 1031 to some properties closer to where they live. Seller did cost seg bonus depreciation to accelerate depreciation schedule. Seller doesn't want to pay recapture tax and is mindful of a solution to defer depreciation.

if we do seller financing, will seller have to pay recapture money? Ideally I’d like to structure a deal with seller financing as traditional bank terms are too high right now and then do a cost seg bonus depreciation on my side to take similar advantages while self managing to off set W2.

Curious thoughts on a solution to solve sellers and my needs.

thanks!