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Installment
Sale Contract
The Installment Sale method offers several advantages:
The Property is sold on the installment basis by a taxpayer in a
high tax bracket who is close to retirement, the retiree may be able to pay taxes on the
gain at a lower tax rate in later years. This particularly effective if the gain on sale
is a short-term gain.
The installment sale method allows for better planning, because
the entire amount to be received is spread out over the many years rather then coming in
one lump sum
Interest rates on owner financing often are more attractive that
other investments of comparable risk
In the installment sale depreciable property, the investor
reports any depreciation recapture as income in the year of the sale. The recaptured
depreciation is deducted from the gross profit before the investor calculates the gross
profit percentage
If the Installment mortgage on a sale of property for more
then $150,000.00 is pledged as security for a loan, the net loan proceeds are treated as a
payment on the installment obligation and are immediately taxable
Installment Sales contract are considered as same thing as Contract for Deed and cannot be implimented unless the
origional pay off is less thenn what thebuyer owes before and or after the initial down
paymnet / consideration.
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