seller financed wrap - how should the gains be taxed?

[Brad Denkhaus]

Hello,

I've asked several CPA's, and gotten varying opinions. Wondering if anyone feels they have fully vetted this subject and come to a definitive answer.

Situation: purchase a property subject to the underlying lien, and then sell with owner financing, wrapping the note that was taken sub-to.

For tax purposes, can it be considered an installment sale, and therefore the gains amortized over the life of the loan, or is this a sale of an investment property, and therefore all the gains will be taxed the year you sold the property?

Thanks!

[Account Closed]

Originally posted by @Brad Denkhaus:

Hello,

I've asked several CPA's, and gotten varying opinions. Wondering if anyone feels they have fully vetted this subject and come to a definitive answer.

Situation: purchase a property subject to the underlying lien, and then sell with owner financing, wrapping the note that was taken sub-to.

For tax purposes, can it be considered an installment sale, and therefore the gains amortized over the life of the loan, or is this a sale of an investment property, and therefore all the gains will be taxed the year you sold the property?

Thanks!

 I do those kinds of transactions in Austin. I have to provide a 1098 Mortgage Statement to the buyers.

I use Texas Title – Ceshker Group, they can fill you in the other details depending on how you do your taxes.