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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Rainmaker
135,434
DALIA KIBBY
Keller Williams Realty Partners SW - Cooper City, FL
Selling Broward County Homes with Passion!
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.   
Apr 23, 2008 05:26 PM #1
Rainer
135,448
Melody Botting
Melody Botting Real Estate Network - The Colony, TX
I hate to go all 'rap' on you but that sucks.  (Consider that my professional opinion).
Apr 23, 2008 06:06 PM #2
Rainmaker
822,638
David Spencer
Keller Williams Team Realty - Bloomingdale, IL
Chicago Area Commercial-Residential R.E.
The IRS has never said "we're your Buddy".
Apr 23, 2008 06:13 PM #3
Rainmaker
822,638
David Spencer
Keller Williams Team Realty - Bloomingdale, IL
Chicago Area Commercial-Residential R.E.
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
Apr 23, 2008 06:19 PM #4
Ambassador
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Todd Clark
Keller Williams Realty - Beaverton, OR
Broker - Beaverton, Oregon Real Estate Expert - (503) 524-9494

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!

Apr 25, 2008 01:30 AM #5
Anonymous
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Rainmaker
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David Spencer

Chicago Area Commercial-Residential R.E.
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