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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13323
Experience:  15years with H & R Block. Divisional leader, Instructor
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This follows the first question I had: We have a potential

Customer Question

This follows the first question I had:
We have a potential buyer for our home. One possibility they want to discuss is to spread the purchase out over a period of time, making monthly or quarterly payments. My understanding is that we would lose the capital gains allowance of $500K, and would then have to take the payments as regular income. Are there any advantages to this approach? The buyers would not have to come up with the entire amount at once, but I do have concerns about the possible impact on us.
Submitted: 1 month ago.
Category: Tax
Expert:  Robin D. replied 1 month ago.

Hello, I'm Robin. Welcome to JustAnswer. I'm reviewing your question now and typing up my reply. I'll post that in just a few moments.

Expert:  Robin D. replied 1 month ago.

If you choose to show as installment sale you do not lose the IRC 121 for exclusion of gain ($500k that you mentioned). To figure your gross profit, subtract your adjusted basis for installment sale purposes from the selling price. If the property you sold was your home, subtract from the gross profit any gain you can exclude.

You are still allowed the exclusion of gain.

You can opt out of reporting as installment, report the sale, use your exclusion, and report the interest each year as taxable.

You can do it either way (installment reporting or in the year of agreement report sale in full) but you do not use your exclusion of gain.

Expert:  Robin D. replied 1 month ago.

Please let me know if you need clarification. If you do not then a positive 5 star rating is appreciated so I get credit for the response. (look for the STARS or SMILEY FACES)

Customer: replied 1 month ago.
Robin, thank you very much. I needed general guidance at this time but will need to make sure I carry out the transaction correctly when the time comes with regard to tax implications.
Expert:  Robin D. replied 1 month ago.

You are most welcome.

It is important for you to know that you do not give up the exclusion which ever way you choose to handle the sale.

A positive 5 star rating is appreciated so I get credit for the response.