Have a Tax Question? Ask a Tax Expert
Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.
Selling at a gain ($10k) and short term holding would mean tax on the gain at regular rate not lower capital gains rates.
The interest and down payment if sold as owner financing and installment sell used, would be taxable in the years received.
Using your IRA would mean you would defer tax. As long as you stuck to the strict rules for no involvement in the property the tax would be deferred until you withdraw money from the IRA.
The interest is counted as income every year that is correct.
After reading over my initial response, I did not actually explain it clear enough.
If the loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale. So you report the sale at a loss in the year of the agreement, the down payment is just part of that reporting.
So you claim the loss then every year there after you report interest income.
You report a % of each payment, including the down payment, as installment sale income from the sale for the tax year you receive the payment. The remainder (balance) of each payment is the tax-free return of your adjusted basis.