Installment Sale
Maximize Profits While Reducing Taxes
What is an Installment Sale?
An Installment Sale is a seller financing strategy where the seller allows the buyer to make payments over time rather than paying the full purchase price upfront. This approach allows the seller to spread out capital gains taxes over several years, while the buyer benefits from flexible financing terms.In an installment sale, the seller acts as the lender, and the buyer takes possession of the property immediately while making payments according to the agreed terms. Ownership is typically transferred once the payment schedule is completed.
How an Installment Sale Works
1
2
3
4
1
Sales Agreement
The seller and buyer agree on the purchase price, interest rate, and payment terms.
2
Down Payment
The buyer may provide an upfront down payment to secure the deal.
3
Installment Payments
The buyer makes regular payments, which may include interest and principal.
4
Final Payment and
Transfer of Title
Final Payment and Transfer of Title
Once the payment schedule is completed, the seller transfers the deed to the buyer.
Benefits of Installment Sales
For Buyers
For Sellers
Flexible financing terms.
Lower upfront costs.
Opportunity to build equity while making payments.
Spread out capital gains tax liability over time.
Generate passive income through interest payments.
Attract more buyers by offering flexible financing terms.
For Buyers
Flexible financing terms.
Lower upfront costs.
Opportunity to build equity while making payments.
For Sellers
Spread out capital gains tax liability over time.
Generate passive income through interest payments.
Attract more buyers by offering flexible financing terms.
