Potential Taxes on Seller Financing

[Justin Hroch]

Hi,

I have an opportunity to purchase a few duplexes via seller financing. I am in the process of conversations with the seller and I want to show them some of the benefits of an arrangement like this. My question is concerning tax liabilities the seller might incur by transferring title but holding the note. 

I know in a typical sell it triggers a tax liability for the seller. Is there any tax liability that happens when the seller holds the note on the property? Is it just the principal and interest paid during the year?