Property seller wants to avoid reportable income

[Robbie Bletscher]

Hello Bigger Pockets Community! I’m in the process of purchasing a small property with the intent to build a rental. The owners are retired and want to structure the deal to ensure that the amount paid to them is not in a lump sum, as this will negatively effect their reportable income and in turn increase their Medicare costs. My thought was to structure the deal as follow:

1. Purchase the property, with the seller carrying the mortgage

2. Complete the build of the rental property

3. Refinance the property, taking into account the equity from the build, and pay the seller in full

The property owner wants to have the payments spread out over 2 or even 3 calendar years to reduce their reportable income exposure. Any creative ideas on how to do this? Any insight would be greatly appreciated!