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Save capital gain taxes when selling your home or real estate especially in Northern California – Use an Installment Sale or Structured Sale under Internal Revenue Code Section 453

One can now sell a home or real estate and get a tax-deferred, guaranteed payment stream for retirement or for any other purpose.

This is an Installment Sale under Internal Revenue Code Section 453 that has been used for years.  Now, a new feature to this Installment Sale transaction allows the seller to receive the future payments guaranteed by a highly regulated trust company or a large life insurance company.  This is called a Structured Installment Sale or a Structured Sale.

A Structured Installment Sale allows the seller to avoid large tax increases, i.e. 15% to 20% for Federal capital gain taxes, 9.3% up to 13.3% for California capital gain taxes, and 3.8% for the Affordable Care Act.  Some taxpayers may even be subject to the Alternative Minimum Tax (AMT).

A large life insurance company may be used for this transaction.  It will issue the annuity contract and guarantee the payments to the seller.

If a trust company it used, it will also guarantee the future payments and U.S. Treasury obligations are normally used.

Both transactions use an assignment company for tax purposes.  Each option provides guaranteed rates of return to minimize investment risks which also provides financial certainty.  The seller depends on the trust or annuity company to guarantee the payments in the first place and not the buyer.

There are other several specific advantages for a homeowner.  It allows one to sell a home and transform that equity into a safe and secure cash flow. Another property does not have to be purchased to defer the capital gain.  Also, instead of living in or maintaining a current residence that no longer meets the owner’s needs, a new property can be purchased that suits the seller’s lifestyle and location requirements.

When selling a home or real estate, the owner wants to avoid paying high taxes and obtain guaranteed future payments for retirement or other uses.  A Structured Installment Sale will achieve these goals.


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