Seller Financing - Short Term Vs Long Term Capital Gains

[Matthew Holland]

Hello BP Crew,

I purchased a foreclosure property in January 2022, did a rehab, and am now able to sell it 3 months later with a around ~$100k short term capital gain.  Since it's only been 3 months, I'm looking for ways to reduce my tax liability.  I've been thinking recently about doing seller financing to spread out the tax liability.  

My question:  If I were to provide seller financing (10 year), would the payments after year 1 be taxed as short term or long term capital gains?  There was only about 3-4 months of time in between the time I acquired and sold the property.  However for the majority of the payments I would receive, it would be more than 1 year of time between the time I acquired the property and the time I received payment.  

I've also considered 1031 exchange, however I'm not sure I will have the bandwidth to take on a new project in the next couple of months.  

Any advice is greatly appreciated!