Installment sale a win-win for real estate buyers, sellers

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DEAR BOB: My tenant in a rental house I own would like to buy it, and I would like to sell to her. Would an installment sale be a good way to save money on the capital gains taxes? Should I contact a Realtor or a real estate attorney? – Ed C. DEAR ED: Installment sales benefit property buyers and sellers. Your profit will be taxed at the current maximum federal tax rate of 15 percent for capital gains, plus state tax. However, the depreciation deducted after May 6, 1997, is taxed at a special federal "depreciation recapture" tax rate of 25 percent. Purchase Bob Bruss reports online. An installment sale spreads out your capital gain tax over the years you receive principal payments from the buyer. The buyer's promissory note is secured by a recorded mortgage or deed of trust on the property sold. If the buyer defaults, you can foreclose to either get your property back to resell for a second profit, or the high bidder at the foreclosure sale will pay off your loan in full. T...