tyler,
Could he actually "finance" the sale?
The buyer is probably looking at crappy interest rates on his property loan (if he needs financing). If the seller (anthropic) is willing to take X% interest and finance the sale, would that meet the accounting requirements you have outlined above? (Or would the interest turn part of the cash flow stream back into "income" for tax purposes?)
I have seen moderately wealthy farmers around me offer financing to the buyers when they are selling 5-10 acre lots for rural homes and their target buyers are young couples (that typically do not have a lot of free cash or great credit scores).
[Just thinking out loud since we have yet another thread with a subject matter expert.]
tyler,
Could he actually "finance" the sale?
The buyer is probably looking at crappy interest rates on his property loan (if he needs financing). If the seller (anthropic) is willing to take X% interest and finance the sale, would that meet the accounting requirements you have outlined above? (Or would the interest turn part of the cash flow stream back into "income" for tax purposes?)
I have seen moderately wealthy farmers around me offer financing to the buyers when they are selling 5-10 acre lots for rural homes and their target buyers are young couples (that typically do not have a lot of free cash or great credit scores).
[Just thinking out loud since we have yet another thread with a subject matter expert.]
Yes owner financing is quite popular with farmers. My grandmother just did this with her grandson on a land sale. Land contract was setup, and the way the taxes work is the total gain is realized for tax purposes over the period of the land contract. In that case it was 5 years and we were able to avoid capital gains as her income was low enough.
That being said, a good attorney is needed for a land contract as you want protections for default and other items. But it’s a valid way of stretching the gain over time and reducing the overall tax burden if it helps fall in a lower bracket as capital gains is progressive similar to traditional income tax.
Evidence of cost is the tricky part, thankfully capital gains is a more attractive rate vs regular income tax. (Max is 20%)
What are the plans for the proceeds? Can they be placed in another investment that could produce other tax benefits such as other real estate ?
