Selling investment or commercial real estate can trigger a hefty tax bill, but an installment sale may help soften the impact. If you’ve owned the property for more than one year, your gain may qualify for favorable long-term capital gains tax rates of 15% or 20%, depending on your taxable income. Receiving payments over multiple years instead of all at once can spread out your taxable gain and may keep you below the 20% capital gains rate threshold in one or more years. It might also help you avoid the 3.8% net investment income tax. But installment sales can be complex. Before selling, contact us to discuss whether one makes sense for your situation.
