Tax Implications of Seller Financing

In the podcast episode "Tax Implications of Seller Financing," host Ryan Bakke dives into the financial nuances of seller financing from the seller's perspective. He emphasizes the importance of understanding the tax implications, particularly in terms of capital gains and depreciation recapture. Ryan explains that while selling a property traditionally can lead to significant tax liabilities due to capital gains and depreciation recapture, seller financing offers a way to defer these taxes over the term of the financing agreement. He illustrates this with a detailed example, showing how spreading out the recognition of capital gains over several years can be financially advantageous due to the impact of inflation. Additionally, Ryan discusses the potential downside of immediate depreciation recapture in the year of sale, which can create a financial burden for the seller. He advises that convincing a seller to opt for seller financing requires education and demonstrating how it aligns with their best interests, particularly in the current market where guaranteed income from a seller-financed note might be more appealing than the uncertainties of reinvesting the sale proceeds.

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Timestamps:
[00:00:00] Intro
[00:01:22] Tax implications of seller financing

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*None of this is meant to be specific investment advice, it's for entertainment purposes only.