Great insight! Thanks! Let us play with numbers!
Say i bought home 20 years ago for $200,000. It was principal residence all those years. Never rented. Home is sold under Land contract seller financing deal, 3 year balloon with 15% down payment. Sale price is $600,000.00. So capital gain is $400,000. Payment will be made initial down payment of $90,000 and p&T, tax/insurance over the next 36 months. Tax/ins will be paid directly to county/insurance company. I get p&t only. I pay tax on interest I receive. Thats ok. Whatever is the remaining balance by the end of 36 months will be paid in a lumpsum on 37th month. The lumpsum amount will be huge.
Do i need to fill out home sale form each of those 3 years showing how much principal i received? or can i just say my initial capital gain was $400,000 (which is tax exempt) and get it over it and keep on paying tax on interest i receive each of those three years?
Thanks again. Your response makes sense and very logical.
