How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13344
Experience:  15years with H & R Block. Divisional leader, Instructor
14155347
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I'm selling some land and need to know if it would help the

Customer Question

I'm selling some land and need to know if it would help the amount of capital gains tax if I owner financed instead of receiving a lump sum
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello,

An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. In each year you receive a payment, you must include in income both the interest part and the part that is your gain on the sale. You do not include in income the part that is the return of your basis in the property. Basis is the amount of your investment in the property for installment sale purposes.

With the installment sale, you pay tax on each year but just on the portion of gain your are receiving plus interest.

Installment sales can also save sellers money if the income from the sale would put them in a higher tax bracket if they receive it in one year.

This is important if you are a higher-income seller, you could be subject to the 3.8% net investment income tax.

It may help you if you anticipate a large gain on the sell (you are only taxed on the actual gain). You will need to pay tax on interest though.

Please advise if you need more information or rating in a positive way is acceptable.

Expert:  Robin D. replied 1 year ago.
Please advise if you need more information or rating in a positive way is acceptable.
Expert:  Robin D. replied 1 year ago.

I am not sure what other information you require.

Related Tax Questions