Tax benefits of using seller financing

[Tanner K.]

What are some of the benefits for the SELLER when using seller financing? I am in Minnesota and I’m trying to buy a rental property using contract for deed. I want to know all the benefits to the seller. How can the seller benefit from this on their taxes? How does it effect capital gains tax? How can they write off the payments or the interest? How can they lessen the tax burden of the sale by doing contract for deed?

[Armin Nazarinia]

@Tanner K.- I wouldn't focus too much on the tax implications of it but more on the additional money they would be making. Instead of you paying a bank 5% you're paying the SELLER. That increases their total yield. Depending on the part of their life they are in they may want this passive income without the hassle of taking care of the property. I would try to understand what your seller is looking for, if possible, and try to come up with a solution that would work for all parties involved.