Structured Installment Sale
A Structured Installment Sale is a highly effective tax deferral strategy for individuals looking to sell high-value assets like real estate or businesses. Instead of receiving the entire payment upfront, the seller opts for a real estate sales installment or an installment sale agreement, allowing payments to be spread out over time. This approach not only provides steady income but also significantly reduces the immediate tax burden by spreading the capital gains tax across multiple years.
With a deferred income strategy, sellers can manage their tax liabilities more efficiently, keeping their taxable income lower in any given year. This is especially useful when selling large investment assets, as it helps maintain financial stability while reducing the risk of a large, single-year tax hit. The flexibility provided by a Structured Installment Sale ensures that sellers can continue to grow their wealth while mitigating tax impacts.
In addition to tax benefits, this method provides buyers with more purchasing power by offering financing options directly from the seller. This arrangement benefits both parties by providing financial security and long-term wealth preservation. Whether you’re selling a business or real estate, a Structured Installment Sale is a smart, tax-efficient solution.
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Why Choose a Structured Installment Sale for Asset Liquidation
Tax deferral benefits
Capital gains tax management
Deferred income strategy
Wealth preservation
Minimized upfront tax liabilities
Improved cash flow management
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A case example for the sale of business
A Structured Installment Sale can help you defer all or a portion of your capital gains by giving you the option to turn the proceeds into a protected stream of income. You only pay taxes on the income for the year the proceeds are received which may decrease the total taxes on the sale.
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F.A.Q.
1. How does a Structured Installment Sale reduce taxes?
By spreading the sale proceeds over several years, a Structured Installment Sale defers capital gains taxes. Instead of paying all taxes upfront, the seller pays taxes only on the income received each year, reducing the immediate tax burden and potentially lowering their overall taxable income.
2. Who benefits from a Structured Installment Sale?
Both sellers and buyers benefit. Sellers gain from tax deferral, long-term income, and manageable capital gains. Buyers benefit from seller financing, making it easier to acquire high-value assets. This structured agreement provides financial stability and flexibility for both parties during asset liquidation.
3. What types of assets qualify for a Structured Installment Sale?
A Structured Installment Sale can be used for a variety of high-value assets, including real estate, businesses, and investment properties. This method is ideal for sellers looking to liquidate large assets while deferring capital gains taxes and maintaining financial stability through a long-term payment plan.