Posted by The Baze on June 02, 2000 at 21:08:34:
If it’s been his personal residence for 2 of the previous 5 years, he won’t pay anything in taxes, assuming he meets the other requirements to get the section 121 exclusion. If it’s investment property (meaning rental, not dealer property), then he can sell on the installment method and recognize income as he receives it.
Tom Bazley
Is a seller taxed for the full sales price when he sells and holds a second? - Posted by THS
Posted by THS on June 02, 2000 at 20:41:52:
I am a newbie looking to buy my first property. I made an offer on a property today where the seller was asking $100,000 for the property. I made an offer of $60,000 down and him holding a second for $40,000. He asked me would he be taxed for the full amount of the $100,000 sales price. I told him that I didn’t know but would get back to him with an answer. Any help from you experienced investors is appreciated.
THS
No, not usually - Posted by Dave T
Posted by Dave T on June 03, 2000 at 16:47:43:
The seller is only taxed on the PROFIT realized on the deal – not the full sale price.
If the property was an investment property, and was fully depreciated, then the seller has a basis of $0. Then the full sale price would be taxable to the seller – with the full sale price allocated between depreciation recapture and profit.
Any tax advice should be obtained by the seller from his own tax advisor. If you decide to offer a hint as to your understanding of the tax implications, always add your disclaimer that you are not a tax professional and the seller should consult his own tax advisor for the specific tax treatment in the context of his financial circumstances.