Depreciation is standing in the way!

[Young Moon]

Hi all - I am in the process of negotiating a 28 unit apartment and the seller is telling me that he may not be able to do the deal because of the tax hit that he would take upon sale.  He has been depreciating the property for the past 10 years and he is concerned that he will not be able to cover taxes owed upon.  He is aware of a 1031 exchange, but can't find a property he would be willing to trade up to.  I also floated seller financing as an option to defer his taxes, but not sure he is interested in that.  Does anyone have any creative tips on solving this issue, so I can land this deal?

Thanks everyone!

[Natalie Kolodij]

If the seller is an accredited investor per SEC standards he can look into utilizing a 1031 exchange to purchase interest in a DST. (Delaware Statutory Trust)