Ensured Installment Sale
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Ensured Installment Sale (by MMIT [VA]) Mar 12, 2018 1:17 PM
       Ensured Installment Sale (by BillS [CO]) Mar 12, 2018 2:08 PM
       Ensured Installment Sale (by Nicole [PA]) Mar 13, 2018 5:57 AM
       Ensured Installment Sale (by Nicole [PA]) Mar 13, 2018 11:51 AM
       Ensured Installment Sale (by Ed [PA]) Mar 14, 2018 3:19 PM
       Ensured Installment Sale (by MMIT [VA]) Mar 15, 2018 7:22 AM

Ensured Installment Sale (by MMIT [VA]) Posted on: Mar 12, 2018 1:17 PM

Has anyone bought or sold using ensured installment sales?

It is my understanding that the buyer purchases an annuity and the seller is the beneficiary. The seller receives the annuity instead of a large cash payment.

The buyer then gets title to the property.

The annuity pays the seller an agreed amount of money over the agreed number of years.

This arrangement is used to spread out the capital gains tax over a number of years instead of one large capital gains tax bill when the property is sold.

Thanks for your help!


Ensured Installment Sale (by BillS [CO]) Posted on: Mar 12, 2018 2:08 PM

Never heard of this approach. Around here we do owner carry. Buyer signs a deed of trust (terms vary by state) and a promissory note. The seller is taxed for capital gains on the principal portion of the payment and interest income on the interest portion of the payment. When the seller (note holder) passes the principal portion is passed to their heirs on a stepped up basis so no more capital gains. --73.34.xxx.xx

Ensured Installment Sale (by Nicole [PA]) Posted on: Mar 13, 2018 5:57 AM

trying to figure this one out. The buyer basically must have all (or most) of the cash for the sale ... that's what purchases the annuity? Benefit is to be for seller, not buyer? --72.70.xxx.xx

Ensured Installment Sale (by Nicole [PA]) Posted on: Mar 13, 2018 11:51 AM

this REALLY has my mind churning. Benefit for the buyer would be they'd pay (completely making up numbers as I've got no idea what type returns annuities pay) $50,000 for the annuity but it would pay the seller $75,000 over time? Sales price would be $75,000 and buyer gets the discount? --72.70.xxx.xx

Ensured Installment Sale (by Ed [PA]) Posted on: Mar 14, 2018 3:19 PM

When the deed transfers you pay tax on the sale in the year of the sale price regardless if payment is made in whole or spread out in payments over years. --72.95.xxx.xx

Ensured Installment Sale (by MMIT [VA]) Posted on: Mar 15, 2018 7:22 AM

In the case of owner financing, the seller holds the note. If the buyer defaults, the seller takes the property back and has to deal with selling it again. Not an ideal situation for an older LL who can no longer deal with the properties.

In the case of the ensured installment sale, the buyer can pay cash or borrow money to fund the annuity. The seller no longer has any association to the property. If the buyer defaults on the loan, the annuity continues to pay the seller. The buyer who defaulted has to deal with whoever he got the loan from.

There is not difference for the buyer if he uses financing from the seller or gets financing elsewhere and buys the annuity.

The advantage for the seller is that he no longer has to deal with the property. He is "retired" from that property and will collect the annuity for the terms of the annuity. --70.188.xx.xx

Subject: RE: Ensured Installment Sale
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Ensured Installment Sale
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