The Tax Bill: One Big Hit vs. The Slow Drip
A Northern Colorado multifamily case study comparing a traditional cash sale with seller financing. The numbers are illustrative — but the structure is real: spreading capital gains over time can significantly change your bottom line.
Traditional Cash Sale: One Big Hit
In a traditional sale, you face an immediate capital gains tax hit (e.g. around $72,000 based on approximate federal and state rates in a single tax year). After commissions and closing costs, you might net around $468,000 — and your monthly income from the asset drops to zero.
Seller Financing: The Slow Drip
With an installment sale, capital gains are spread over 7+ years, reducing the annual tax burden. You receive steady monthly payments (e.g. $3,440 at 6.5% interest — like a pension without landlord headaches) plus upfront cash at closing (e.g. 15% down). Selling direct can also save roughly 5–8% in traditional listing fees. In the case study, the 7-year bottom line showed significantly more total received with seller financing than with a single lump-sum net. Always consult a licensed CPA for your specific tax situation.
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