Seller Financing from a 100-Year-Old Neighbor

[Kelby Schimming]

Hi BP, 

I am trying to work out a seller finance deal with my neighbor who is 100 years old. The property is a duplex, and he plans to give all the proceeds from the sell to his daughter. Her plan is to get the absolute most she can from the duplex so I suggested seller financing. I am just unsure if we can avoid capital gains taxes if we do the seller financing route. 

His wife passed in May of 2023 so we are trying to work out a deal before May 2025 so we can avoid the capital gains taxes. He has lived in the duplex for the last 20 years and according to my research, you can avoid taxes on capital gains up to $500,000 if the property is sold within two years after a spouse's death. Correct me if I am wrong, please!

If we do a seller financed deal, can we still avoid the capital gains tax? 

Is there a way we can do a seller financed deal and still avoid the capital gains tax? 

Any insight would be appreciated. 

I can provide more info if need be!  

TIA!