Posted by Bob on November 02, 2005 at 16:33:44:
Could you give me more detail?
What method would tax only the interest earned on the contract for sale?
Bob
Tax Consequences of Selling on Contract for Deed - Posted by Bob
Posted by Bob on November 02, 2005 at 13:16:45:
For tax purposes, when a property is sold using a contract for deed, does the IRS consider it a sale and require that I pay capital gains taxes based on the sales price, even though I have not received full payment for the property and will only receive monthly payments with a balloon due in five years?
If so, is there another way to sell the property and pay taxes only on the amount of the payments received each year?
Bob
Re: Tax Consequences of Selling on - Posted by Don Dion
Posted by Don Dion on November 02, 2005 at 15:35:47:
This is a great question and one that you will want to ask your local tax accountant. It’s important that he set this up months in advance of you doing your taxes since the accounting meathod will deem which way the tax is paid.
If you choose one it will be paid in full this tax season as if you sold it completed transaction. If you choose the other you will only have to pay tax on the interest earned on the contract for sale.