Seller Finance Options

[Lawrence S.]

So, I wonder what is possible consistent with IRC 453 (for installment sales). This derives from a close reading of IRC 453 and/or Publication 537 (which deals with seller financing).

1. If the buyer doesn't want to do a seller finance, can you just buy trust deeds during escrow to substitute for it? Or is it going to be considered all cash since you have constructively received it?

2. Or again if the buyer doesn't want to do a seller finance, can you take the cash, buy properties then rent them out during escrow?

3. Or do you need to have the original buyer to do a seller finance for one day and then restructure it, possibly by walking the financing to another property?

The problem that I am seeking to resolve is if the buyer only wants to pay all cash----doesn’t want to do a seller finance---is there any way around this problem?

These approaches might seem counterintuitive, but even if the original buyer did agree to a seller finance the law indicates you can substitute another buyer if they either want out or default on their obligation.

Does anyone know how to structure this? Could you do this if you involved a 1031 company?

Thanks