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Updated over 5 years ago on . Most recent reply

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57
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Travis Brizendine
  • Omaha, NE
15
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57
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Seller financing discount points, taxable income, or deduction

Travis Brizendine
  • Omaha, NE
Posted

We are under contract on a property. We have 60 thousand dollars in a 1031. The seller is willing to charge us 30k in points to seller finance the deal. However, we would like 25k back after closing for repairs etc. Question: the funds he receives as “points” are they tax deductible to him, or is he taxed as income on that since it’s being received.

Thanks a ton in advance. *numbers are hypothetical*

Most Popular Reply

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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
13,508
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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
  • West Palm Beach, FL
Replied

Money received is never “tax deductible”....points would be earned interest income.  You getting $25k back after closing is going to cause some 1031 issues I believe.  

Not sure why you’re trying to structure it this way.  Maybe tell us why.

@Dave Foster may have an idea.

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