Structured Installment Sale Experts
A national leader in Capital Gain Tax Reduction
20 years of capital gain tax deferral experience in the sale of appreciated real estate.
Looking for innovative and tax-advantaged solutions for property or business sales? Our experts provide options, including structured installment sales, to meet your unique needs.
453 Structured Installment Sale vs. 1031 Exchange
453 Installment Sale
For all types of real estate – including primary residences and second homes that have never been rented that do not qualify for 1031 exchange.
Eliminates having to continue to manage real estate
Eliminates having to continue to have mortgage debt.
Excludes properties generally involve stocks, bonds, securities, and interests in partnerships. Property held “primarily for sale” is also excluded.
One often stays invested in the same type of property sold with the same level of active management and maintenance requirements of the properties they just sold.
One has to keep the current amount of debt mortgage in the new investment or increase their debt mortgage by buying a more fair market value real estate.
Why is delaying taxes now better than paying them today?
Delaying tax payment into the future often reduces the tax rate percentage you pay and the total amount of taxes you pay.
ISR maximizes your sale proceeds earning power and investment return yields by minimizing taxes. The full amount of your gross sale proceeds (including the deferral of your large tax liability) results in more sales proceeds. These sale proceeds are immediately invested for a current and retirement income cash flow stream. By deferring the payment of taxes into the future, you have more gross sale proceeds being invested to generate you more income revenue. More money to invest = more income generation potential.
How does an Internal Revenue Code (“IRC”) section 453 Structured Installment Sale Work?
IRC section 453 has been around since the beginning of the enactment of tax code. It simply states that if a taxpayer receives sale proceeds, from the sale of appreciated assets, in more than one payment – over the course of time (5, 10, 15, 20, 25, 30 years), then the taxpayer can make its tax payments as it receives the sale proceeds payments. The taxation of the sale proceeds are delayed and deferred until such time that the payments are received by the seller taxpayer.
- More gross sale proceeds remain invested for the benefit of Seller as taxes are deferred and not immediately due at the closing of the sale transaction;
- Taxes are only due and payable upon Seller’s receipt of periodic payments from the time period for payments described in the installment sale; and
- Investment yields are earned on what would have been the net sale proceeds after taxation in a traditional lump sum one-time sale payment plus on the deferred tax amount.
How does a Seller implement an ISR Structured Installment Sale transaction?
ISR is a highly specialized business focused on Installment Sale transactions and assuming the periodic payment installment sale: debt obligations owed to the Sellers by Buyers.
To assist Installment Sale Sellers and Buyers, ISR has simplified an Installment Sale transaction between a Seller and Buyer into 3 steps:
1. Seller and Buyer amend their Selling/Buying Contract
This allows the Seller the option to take payment of their Net Sale Proceeds over a number of period payments. For example, Seller wants the option to take their net sale proceeds over a period of 10 years and to receive 2 payments per year. ISR complimentarily provides a sample Amendment to the Sale Contract for the Seller and Buyer to discuss with their legal representatives.
2. Seller signs & sends back to ISR, ISR’s “Notice to Seller Document”
This indicates that the Seller has acknowledged and assented to ISR’s assumption of Buyer’s installment sale payment debt obligation to Seller.
3. ISR and Buyer enter into a debt assumption agreement
This is a contract between the Buyer and ISR, where ISR takes over Buyer’s debt obligation. ISR steps into Buyer’s shoes and becomes directly obligated to make payments to Seller. And ISR becomes entitled to receive the Net Sale Proceeds at the Sale Closing to collateralize ISR’s payment obligation to Seller.
Every Sellers’ Installment Sale transaction is custom-tailored to meet the specific financial needs of the Sellers. ISR uses the term “structured” to mean a customized transaction designed by a capital gain tax reduction transaction LLM Taxation Attorney.
ISR preferences investing the money that Buyer transfers at closing into private wealth management at top tier private wealth banks, further, managed by a top 250 wealth advisor located in Boston, Massachusetts. This provides two levels of safety as a mechanism to provide Seller’s security that investment criteria to produce predictable installment cash flow disbursements. Sellers can more flexibly choose installment sale payment streams to be quarterly, semi-annually, annually or to delay payments first to build up and increase fair market values of investments prior to the first payout being made.
Ready to learn more about what structured installment sales can offer you?
Contact Installment Sale Realty today to explore more about this innovative option and if it can provide tax savings for you.
You can also reach out to us about a no-obligation consultation online.