We have an offer to sell our park and carry a note. Our goal is to defer paying capital gain tax by eventually moving the equity into another property using a 1031 exchange. There are several discussions (online; not here on the forum) about how seller financing can be used in conjunction with a 1031 exchange. However all discussions/descriptions seem complicated. Does anyone have experience with this situation? If so, can you (in simple terms) explain how an owner can sell their park, carry a note, and still defer tax on the gain.
For a 1031 exchange you can have no funds from the sale in your hands or control. We simple buy other properties that are saleable and unload them when our income is lower and thus pay less capital gain tax and have more money than not doing a 1031. Our intentions were to buy another park BUT the numbers, time, and money input were not adequate for our business plan. Still looking for an owner-operated parks. Call 918-314-4574 for owner-operators wanting to sell–have cash and can make a deal workable for both parties.
It is my understanding that although you may not (easily) do a 1031 while carrying a note on a sale, you only have to declare the gain each year that you receive, which may reduce the tax burden. You can still probably 1031 the down payment into another property. Anyone else have this same understanding. How does it work? I’d like to know too.
The party holding the 1031 funds are knowledgeable and generally will not cost you an attorney’s fee. In our case we bought multiple properties and ending up with no mortgagees. Your comments MPH are correct you pay taxes on your gain. We will start selling the properties we bought with our 1031’s but will hold for 1 year to avoid short term capital gains and take our time to buy what we exactly want to own and still pay little taxes in the long run.
You want a simple answer to a tax question? HaHa
Try reading this: 1031 Exchanges and Seller Carry-Back Financing | Tax Deferred Exchanges and Seller Carry Back Note | Installment Notes | Contract for Deed | Land Contract| Installment Sale Treatment | EXETER 1031 Exchange Services, LLC |
Mike Weiss
mweiss1031@gmail.com
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