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Installment Sale


In an Installment Sale a seller may offer to take back a note from the buyer for some portion of the sale price, thereby financing a portion of the sale. This strategy is referred to as an Installment Sale for tax purposes.

 

Within specified limits, the IRS permits a seller of property to report a gain from an Installment Sale over the collection period of the note the seller carries back. Without this provision, the seller would owe tax on the sale amount even though all monies are not yet received.

 

Benefits of an Installment Sale:

  • Seller defers some capital gains taxes
  • Seller garners an income stream from interest payments
  • Seller is freed from property management responsibilities
  • Buyer potentially secures higher leverage than would be permitted by traditional lender
  • Buyer potentially secures a lower interest rate than that offered by traditional lender

 

For more information on Installment Sales, please visit Tax Topics on the IRS’ website.

There are benefits and risks associated with participating in an installment sale. The AptBldgTrader.com Team strongly recommends that you consult with your attorneys, tax professionals, and/or certified financial planners to decide if an installment sale is right for you.

 

Please click on the links below to learn more about the seller services we provide:

 

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