How a Two-Year Installment Sale Strategy Can Save on Taxes

When selling property or another substantially appreciated asset, you could spread the taxes over two years to save big bucks. Following the rules is critical, though.

A woman works on tax planning with her laptop, paperwork and calculator.
(Image credit: Getty Images)

Navigating the intricacies of asset sales demands a strategic approach akin to conducting a finely tuned orchestra. Among the array of tactics available, the two-year installment sale strategy emerges as a sophisticated method for optimizing tax outcomes, particularly for assets with a low basis.

Essentially, an installment sale, as defined by the IRS, involves selling an asset with at least one payment received after the tax year of sale. This approach offers a strategic advantage by allowing sellers to spread their capital gains tax liabilities over a predetermined period, typically two years. The appeal lies in its ability to mitigate tax exposure, enabling sellers to manage their tax burden more efficiently.

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Derek A. Miser, Investment Adviser
Chief Managing Member, Investment Services, Miser Wealth Partners

Derek Miser serves as Chief Managing Member at Miser Wealth Partners, LLC, located in Knoxville, Tenn., and Tellico Village, Tenn. Miser Wealth Partners delivers family office services to successful retirees and entrepreneurs nationwide and in Puerto Rico. He recently published his first book, "Golden Years, Greener Pockets." This guide to tax efficiency for retirees is an excellent read for anyone contemplating or already retired.