Posted by Sherm on May 12, 2008 at 13:58:24:
In Reply to: Do I need a CPA for Lonnie Deals? posted by Dave on May 12, 2008 at 09:19:58:
You will have to pay capital gains tax on the difference between what you have in the home and the selling price in the year the gain was realized. Suppose you have 3k in the deal and sell it for 10k with 500.00 down. You must pay the capital gains on 7k even though you have not collected the money.
Some others will be along to suggest a method championed by Ernest Tew. I believe it is some sort of lease option. The capital gains issue is the elephant in the room that rarely gets mentioned about Lonnie deals. Paying uncle Sam taxes on money you have'nt collected can really suck. But, that is just the way it is.
You might want to search the archives for Ernest Tew and see what his method is.