Posted by Michael Morrongiello on March 24, 2001 at 11:58:44:
Taxes are always a complicated matter and one should seek COMPETENT counseling.
Assuming you are not considered a “dealer” in Real Estate, when you sell a property and finance it, you can elect to create what is often called an “installment sale”.
From a tax standpoint you will be taxed each year on the amount of interest you collected and that portion of principal repaid to you that represents you “gain” in the sale of the property.
The actual tax calculations for reporting purposes can be tricky so its wise to seek advice.
One of the favorable reasons to use the installment sale method for accounting purposes is that you are NOT taxed on your “profit” all at once.
To your success,
Michael Morrongiello