Repossession of Seller Financed Property

By
Real Estate Broker/Owner with Keller Williams Team Realty

A gain is recognized when property is reacquired.

The Seller, on a seller financed property,  when reacquired now has all the payments previously made by the ex-buyer plus the property back. he government says that this is now all taxable gain. This is only limited to gain already realized.

The gain upon reacquisition is equal to the cash and fair market value of the property received by the seller prior to the acquisition, less gain previously reported.

Have a good day. 

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Groups:
Investors
Foreclosures
Tags:
installment sales
reacquisition of property
property taken back
tax consequences

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Anonymous
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Rainmaker
129,142
DALIA KIBBY
Selling Broward County Homes with Passion!
Keller Williams Realty Partners SW
So all the payments received by the seller,, prior to repossessing the property, are considered realized gain?  We're not seeing too much seller financing down here b/c sellers are strapped for cash.  I remember hearing a lot about seller financing in the early '80s; folks had real equity then, I guess.   
April 23, 2008 05:31 PM
Rainer
135,448
Melody Botting
Melody Botting Real Estate Network
I hate to go all 'rap' on you but that sucks.  (Consider that my professional opinion).
April 23, 2008 06:06 PM
Rainmaker
795,068
David Spencer
Chicago Area Commercial-Residential R.E.
Keller Williams Team Realty
The IRS has never said "we're your Buddy".
April 23, 2008 06:13 PM
Rainmaker
795,068
David Spencer
Chicago Area Commercial-Residential R.E.
Keller Williams Team Realty
A contract sale is profitable when the seller has the opportunity to delay receipt of appreciated gain. I had a client that enjoyed a monthly income for 20 years
April 23, 2008 06:19 PM
Ambassador
2,032,210
Todd Clark
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494
Keller Williams Realty

I special in Owner Financing and you are right this can happen, but the gain you make outweighs the potential of having to pay tax on your gain, because now you can sell if for full price again!

April 25, 2008 01:30 AM
Anonymous
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Rainmaker
795,068

David Spencer

Chicago Area Commercial-Residential R.E.
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