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Installment Sales - A taxpayer owns rental property (over…

Installment Sales -A taxpayer owns...
Installment Sales -A taxpayer owns rental property (over several years). Taxpayer is selling rental property and will hold the mortgage for the purchaser. Will this be considered a straight sale, recording entire gain and then the taxpayer will record interest income on note receivable? Or will this be considered an installment sale where the gain is recorded as payments are made?What is difference between installment sale and holding the note on a piece of real estate?Thanks,
JW
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Answered in 9 minutes by:
8/29/2017
Robin D.
Robin D., Senior Tax Advisor 4
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An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. One can always opt out of reporting as installment and then not use form 6252 but report the full sale in the first year and then report interest every year there after.

It is an installment sale but they can report not using that method.

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Customer reply replied 10 months ago
holding the mortgage note for a piece of real estate you have sold is the same as an installment sale. The taxpayer can make that decision on the tax treatment when they prepare the tax return.

Correct

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
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Experience: 15years with H & R Block. Divisional leader, Instructor
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