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Updated over 2 years ago,

User Stats

7
Posts
0
Votes
Ben Gonzalez
  • Investor
  • Houston, TX
0
Votes |
7
Posts

Dealer Status and Installment Sales

Ben Gonzalez
  • Investor
  • Houston, TX
Posted

My understanding of Dealer Status is that if you are flipping on terms (in my case: buy on terms, fix -or not-, then sell on terms) then you lose the ability to be taxed as an installment sale where your gain is spread out over the term of your note.  

This really hurts when you have, for example, a $50k gain that is fully taxable on year one, while you only made say $15k on the downpayment.  Now you have $15k owed in taxes, instead of the taxes being spread out over 30 years.

Is this correct?  Are there any ways to still do this strategy and still be taxed per the installment sale code?

I also hold rentals as well, so I have a separate entity for that...in case this factors into any consideration of the above.

Thanks in advance everyone.

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