In Real Estate, What is an Installment Sale?
A real estate installment sale is a way to sell real estate at a profit and fully or partially postpone paying taxes on that profit until the following year. What this means is that the purchaser makes yearly installment payments, with interest if required, to the seller so that the income will be taxable income for the following year. While a real estate installment sale is a frequent method of sale in the real estate market, it is only available for use by individual buyers and sellers and generally deals with investment properties. The real draw of a real estate installment sale is the ability to spread the tax liability from the sale of the property over a period of years. For example, if a seller receives a 30 percent down payment on a property in any given month, they will not receive another installment on the sale until the following year. This means the only tax liability is the 30 percent down payment that was received for the current tax year. Another boon for a seller is th
