Buying a large package on long-term contract


#1

Okay guys im working on a deal to buy 7 duplexes as a package and followed up with a 2nd package of 2 dups and house.

My question is tax based at this point. The current owner picked thes up 1 at a time over the last 25 years. We’re are looking at doing a long-term land contract on the whole group of 7 duplexes. He is having his CPA look at the tax impact of selling to me with basically no-money down and a 25-30 year AMM with 10 year balloon or no balloon. The down payment would consist of security deposits, rent credits and pro-rated property taxes. There is some appreciation gain as well as the recapture of depreciation. My impression is that he only has to claim what I pay him in any given year…is this correct thinking?? I guess the credits would have an impact in the 1st year. Anyway around that?? Properties are in Indiana.

Its a waiting game to hear from the accountant but id like to hear if anyone has some insight.


#2

Brandon,

You are talking about an installment sale. The laws have changed since I first learned how this is treated for tax purposes.

Do post back to the thread what you learn. I suspect there will be others who are also interested.