Key Takeaways
- Subject-to buyer's basis is purchase price paid, not mortgage balance.
- Seller financing creates installment sale spreading gains over time.
- Installment sales reduce annual tax burden by keeping seller in lower brackets.
- CPA experienced in creative financing is essential.
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Test Your Knowledge
1.What is the buyer's depreciation basis in a subject-to acquisition?
2.How does installment sale treatment benefit the seller in a seller-financed transaction?
3.What percentage of each principal payment represents capital gain in a $200K sale with $120K basis?