This is not an answer, but just FYI to get your thinking on track. I'm waiting for someone more knowledable in seller financed sales to jump in here. But here goes............
What "remaining balance" on the first sale? Assuming you sold it for let's say, $100,000, did you physically give the buyer that amount? I don't think so. I think that you agreed to sell the house for lets say, $100,000 and after the buyer paid (for the sake of argument) $20,000, they realized they could not afford the house, so deeded it back to you. So you have lost nothing, and gained $20,000 that you did not refund to the buyer when they elected to deed it back to you in lieu of foreclosure. It's "as if" you rented the house out for that period of time. New we wait for someone that can actually answer your question, while I research it.
