Seller financing - I am seller - tax, legal, is this a good idea

[Maria Bocanegra]

All,

I am hoping to get some feedback here w/ potential seller financing (I am the seller). I am a lawyer by trade and am generally not too good w/ understanding tax numbers, etc. I will try to keep it simple - any feedback or thoughts are much appreciated.

- Original purchase price $170k w/ 1031 money

- Assume I have lived in property last 2 of 5 years now

- Assume no depreciation taken (i am not certain of this i would have to check past tax returns but assume this for now)

- Current market value: $170k (unfortunately this property has not seen any gain)

- Buyer proposes the following terms:

- Purchase price: $170k (market)

- Interest Rate: TBD (any thoughts?)

- Monthly P&I: TBD (not sure on this either)

- 5 year “balloon” buyer to refi to traditional mortgage

My (seller) motives for selling: no longer want to own, want to free up cash and avoid traditional closing costs.

My questions center around (if this makes sense)

- Do i face any tax on the down payment in the assumed scenario above?

- Do i face tax on the monthly interest?

- Do i face tax on the principal payment?

- Do i do an “installment” plan versus something else?

- Have i successfully avoided any potential 1031 issues?

- Is there ideas to structure the deal to avoid as much tax as possible on any portions of this scenario?

I really appreciate all of you and welcome any feedback. BTW - also seeking lawyer referrals familiar with drafting these types of purchase agreements/contracts. Property is located in Chicago, IL.

Maria.