All Forum Posts by: Mallikarjun Reddy Pateel

can you do seller financing on Deferred sale trust? what i mean is me as a Buyer, Can i acquire the Property from a seller through Deferred sale trust and make monthly payments for agreed 30 year Term? 

is there anyways that seller can avoid paying capital gains tax if he plans to take that money from Trust?

Great Insights everyone, Thanks for the advices!!

@Allan Smith Great advice to have a Clear exit strategy.

if the Deal is Good enough that has 2.0 DSCR, is that Possible for me to get a Private Money/ Hard money loan for the Rental Properties I'm Planning to Acquire? my Credit is around 600 IDK if that's Good enough or not. my Exit strategy will be Buy & Hold long term for Cash flow or either fix my Credit and get a Refi from a bank and payoff Private money.

@Daniel Dietz right, there is 3 Components IRS will be taxing my seller, if I do Installment sale(Seller Financing)

• Interest income.
• Return on his adjusted basis in the property.
• Gain on the sale.

my question is, will it benefit my seller compared to paying Huge chunk of money on capital gains almost a seven figure vs doing a Installment sale and paying Taxes on yearly basis for the adjusted basis sale price + Interest payments he receives. 

Thanks!

based on the numbers he will be receiving $64,418 every year(adjusted Interest + Principal Payments every year). is this entire income charged as Capital gains by subtracting his adjusted basis? plus Recaptured amount? 

or he will pay Ordinary Tax rate on this every year Principal and Interest payments he receive? 

I'm currently in talks with a Senior Owner to buy his 10 Unit Rental Property through Seller Financing. i have couple of questions Regards to tax benefits to him. so I can speak more Confidently about this deal.

Numbers are not accurate Let's take some assumptions

he bought the property in 1970 for $100k. I'm giving him Purchase price of $1M. zero down Pay. 30 years term @5% Interest Rate.

1. his Capital gains will be $900k(Sale Price - adjusted basis) which will be charged at 20% Long term capital gain. which triggers $180K in Federal Tax and not Including NJ state Tax, if he sells at one shot. but if we do Seller Financing I guess his Principal and Interest Payments will be taxed at ordinary tax rate based on his Tax Brackets over 30 years of our Loan term. in this seller Financing is he Paying same amount back to the Gov. in taxes as he would pay in One time sale or is he benefiting from seller financing by offsetting Taxes?

2. when does the Depreciation Recapture triggers in this seller financing? at the end of 30 Year Term? i think he only paid $100k back in 1970 he might only depreciated the same amount over 39.5 years and any Improvements he made. will this Depreciation Recapture can be a Disaster for my seller doing seller financing? or it's still a Good deal for him?

I appreciate any thoughts on this. Thank you!!

what markets do you guys think will make most sense for House hacking? Ideally one hour away from NYC. I’ve been previewing all day long but even in New Jersey prices and taxes are super high. I know it’s sellers market but still

What are the factors that you look at that makes you More confident whether Acquiring or Investing in a Location you have limited Knowledge of?( same state but different neighborhood or Out of state)

@Travis T.

How does that work? Does it have property owners info such as pre foreclosures, vacant tired landlords or do i need to export from propstream?