Posted by firefox on September 15, 2003 at 18:30:14:
I’m very interested in seeing how that works.
Peter Fortunato showed me an interesting note solution, but the real benefit accrues to the home seller. Consider this:
- home seller sells $100k house to A for $100k note
- home seller files IRS form to opt out of installment sale treatment. 100% of gain is taxable in year of sale
- any tax owed? no, gain is< $250k (section 121)
- home seller sells note to B for $80k cash
- since seller opted out of installment sale treatment, seller gets a $20k capital loss.
Offering a seller $80k cash and $20k in tax benefits, rather than just $80k cash, makes an interesting value proposition.
If A was your friend and B your IRA, imagine the possibilities.