![]() With an installment sale involving real estate, the buyer makes payments to the seller over time, rather than paying the entire purchase price at closing. In this article we provide an overview of installment sales of real property and how to report gain on such sales under the installment method. ![]() Many people use “installment sale” to refer to both the sale and the method of reporting tax on gain, but while they are certainly closely connected, an “installment sale” is different than the “installment method” of reporting gain. ![]() ![]() In such cases, the seller receives some or all the purchase price after the year of sale, which means, absent applicable exceptions, the sale is an installment sale under the Internal Revenue Code (the “Code”) and any gain on sale will be reported under the installment method. But it is common for many sales of real estate (particularly commercial/rental real estate) to include some amount of seller financing. When planning to sell real estate, it is natural to want to attract a qualified buyer with cash on hand.
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