Lee B Posted March 7, 2023 Report Share Posted March 7, 2023 Client sold a house originally intended to be a rental but it was never rented, purchased in 2020 and sold in 2022. Sold for $435,000 with a basis of $415,000. Received Down Payment of $49,000 took back a Promissory Note for $385.000. The Promissory Note is interest only with a balloon payment due in 2029. With down payment in 2022 and the balance of the principal in 2029 would you handle this as a Installment Sale? Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted March 7, 2023 Report Share Posted March 7, 2023 Yes. 1 Quote Link to comment Share on other sites More sharing options...
DANRVAN Posted March 8, 2023 Report Share Posted March 8, 2023 2 hours ago, cbslee said: With down payment in 2022 and the balance of the principal in 2029 would you handle this as a Installment Sale? I would take a look at it both ways. It looks like using the installment election your client would recognize about $2,000+ capital gain in 2022; and $18,000- in year 2029; vs recognizing gain of $20,000 in 2022. How would the extra $18,000 effect 2022 income taxes? Any capital losses or $0 percent capital gain bracket to consider? 1 Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 8, 2023 Author Report Share Posted March 8, 2023 Their income is down this year but no capital losses available and no 0 percent capital gain bracket available. Normally they're in the 24% federal bracket or higher. Quote Link to comment Share on other sites More sharing options...
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