Installment Sales Can Postpone Taxable Income
The installment method of accounting for sales of property allows taxpayers to report realized gains as payments are received versus in the year of sale. The installment method can be used by certain taxpayers under specific circumstances. The rules can be rather complex, but if allowable, the installment method can significantly postpone the payment of taxes. If you sell a property this year to a credit worthy buyer, and you don't need all of the sales proceeds immediately, consider an installment sale. Otherwise, the smart course of action is to collect your sales price up-front and pay the income taxes currently. If you are considering an installment sale, contact us to determine if the method is available for your transaction.