How much will your California sale actually cost you?
What this is: a structured installment sale calculator. It compares a cash sale (all tax due this year) with an IRC Section 453 structured installment sale that spreads the gain and the tax over a payment schedule you choose. Results are estimates, not tax advice; run your numbers, then request a written review.
By Hans Goldstein, EA, Tax & Exit Planning · Updated Admitted to practice before the IRS.
Short answerThis structured installment sale calculator compares paying the tax on a cash sale in one year with spreading the gain under IRC §453. Enter the price, basis, depreciation and state to see year-one tax, after-tax proceeds and what a 5 to 30 year payout nets you, using 2026 federal and state brackets, the 25% recapture rate and the 3.8% NIIT.
Enter five numbers and in about 30 seconds you will see whether a Structured Installment Sale keeps more money in your pocket than selling for cash.
What's SIS? Structured Installment Sale. Sell once, get paid in monthly checks for 5 to 40 years by an assignment company, funded by a fixed annuity from a highly rated life insurer. The IRS taxes each check as it arrives, not the whole sale up front. Smaller checks put you in a lower bracket, so you keep more.
Before you read further
What is the tax bill on your sale going to be?
Send me the sale price and rough basis and I'll email you the actual number within one business day, plus the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Your numbers
All five fields matter. Income is the big one. It tells us how hard the tax stack hits you.
Net proceeds at closing, after commissions, loan payoff & any cash you keep out.
Purchase price + improvements
If yes, applies §121 exclusion ($250K single / $500K MFJ)
This is the most important field. Your existing income determines whether the cash sale stacks your gain into the top 20% LTCG rate + 3.8% NIIT + the CA MHST cliff over $1M. Higher income = SIS saves more. Be honest, be a little high if anything.
5 yrs15203040 yrs
Advanced inputs (depreciation, prior 1031, city tax) if they apply
Rental/commercial only. §1250 at up to 25% federal + CA marginal, taken first out of each payment.
If you 1031'd in, the carried-over basis from the original property.
Need more knobs? The advanced calculator has the rest: city/county tax, HYSA/MYGA blend, SIS yield slider, life expectancy, devil's-advocate scenarios, etc.
Your answer
Same sale. Same 4.4% yield. Different tax exit. Here’s where you land after 20 years.
Take the cash
$0
Pay $0 in tax up front. Reinvest what’s left at 4.4%.
Structure it (SIS)
$0
Smaller tax bills spread over 20 years. Each payment also grows at 4.4%.
SIS keeps you ahead by
$0
SIS pays you ~$0/yr after tax for 20 years, in a lower bracket each year, and all of it compounds.
Where the win comes from
Pure tax savings
If neither side earned a dime of interest.
+$0
smaller brackets, year after year
+ realistic 4.4% growth
When your money keeps working.
+$0
tax savings + compounding
SIS wins both ways. Even with zero growth, you keep more on tax alone. Add realistic 4.4% and the gap widens by $0. That extra is compounding on a larger pre-tax base, because SIS hasn't handed Uncle Sam his cut up front.
n/a
Why it wins, in plain English
Two people sell for the same price. One pays the tax now. One defers with SIS. The difference comes down to three things.
Pay the tax now and you only grow 65¢ of every dollar. Defer it with SIS and the whole dollar keeps working for you. Same rate, bigger pile.
At this rate your $2,000,000 roughly doubles to $4,000,000 in about 18 years. The cash seller doubles on the same clock, but only the smaller after-tax pile.
Your full dollar stays working (not 65¢), and the gain is taxed in small yearly slices at lower rates. On a typical high-tax California sale that's about $1.29 kept for every $1 the pay-now seller ends up with; your exact number is up top.
What the calculator is actually doing
Where does the money go each year? You get a check, pay that year's tax, and we assume you reinvest what's left at the same 4.4%. Nothing disappears, and the cash side reinvests the same way, so it's a fair fight.
Is the interest taxed? Yes. The interest/growth is taxed as ordinary income every year, on both the cash side and the SIS side.
Federal and California? Both: federal capital-gains + 3.8% NIIT + California income tax + the 1% surtax over $1M + depreciation recapture at up to 25%. The whole stack.
4.4% yield on BOTH sides. Cash net reinvested at 4.4% (taxed yearly as ordinary income); SIS at 4.4% carrier credit. This isolates the deferral advantage against a taxable fixed-income alternative; the structure keeps your whole pre-tax balance compounding. Real carrier rates run roughly 4 to 5%, depend on the term length, and are quoted & locked-in by the insurer at placement.
No carve-out. Real deals carve out cash at closing (tax bill, debt payoff, emergency); 99% of placements do this. We’ll size it on the call.
No IRMAA. The 2-year Medicare premium surcharge that hits one-time income spikes isn’t modeled. SIS dodges most of it; cash sale often triggers it.
No city / county transfer tax. LA, SF, Berkeley, Oakland, Culver City have nasty MHST-style adders that SIS partially defers.
No AMT, no depreciation recapture acceleration, no prior 1031 wrinkles. If any apply, the cash-side tax is worse and SIS wins by more.
Want every dial? The advanced calculator has carrier-yield slider, HYSA/MYGA blend, devil’s-advocate comparison, life expectancy, etc.
Disclaimer: Illustrative projection only. Actual returns vary. Carrier credit rates change. Tax law changes. Annuity guarantees subject to claims-paying ability of issuing carrier. Not tax, legal, investment, or accounting advice. Consult your CPA before acting on any number on this page.
Walk through your specific numbers with Hans.
30-minute call. No pitch. Bring your CPA. Either SIS fits your sale or it doesn't. You'll know in 10 minutes.
Get this analysis by email: every input, every computed value, the year-by-year SIS breakdown, plus a live link your CPA can open to see this exact scenario.
Educational only · not a quote · not advice. Numbers are illustrative ballparks using 2026 federal + California brackets. Actual carrier rates are quoted only by carrier-appointed structured-settlement specialists at placement. Annuity guarantees subject to claims-paying ability of the issuing carrier. Consult your CPA before acting.
Show me the math: tax breakdown line by line
Cash sale: Year-1 tax
Federal LTCG$0
NIIT (3.8%)$0
California tax$0
CA MHST (over $1M)$0
§1250 depreciation recapture$0
Alternative minimum tax (AMT)$0
§121 exclusion applied$0
Total tax$0
Net cash kept$0
SIS: 20-yr amortizing annuity @ 4%
Annual carrier payment$0
Gain recognized per year$0
Tax each year (LTCG + interest + CA)$0
Net each year (after tax)$0
Total tax over 20 yrs gain tax + tax on interest you earn$0
Value at year 20 (net + 4.4% reinvest)$0
Assumptions: Apples-to-apples 4.4%/yr yield on BOTH sides over the term. Cash net is reinvested at 4.4% taxed yearly as ordinary income (your marginal rate); SIS uses 4.4% carrier credit on the principal balance (amortizing annuity), with each year’s after-tax payment also reinvested at 4.4% taxed-as-earned. 2026 federal + California LTCG + NIIT + MHST brackets applied. No city tax, no IRMAA modeled, no carve-out (100% structured). Real carrier rates run roughly 4 to 5%. Advanced calculator exposes every variable.
Next step · for sellers age 55+
This calc shows ONE term. The optimizer tries every term and tells you which one wins.
If you have a pre-tax IRA/401k, the SIS opens a Roth conversion window in the years before RMDs kick in. The optimizer factors in your age, IRA balance, Social Security, and IRMAA cliffs, then ranks every SIS term 5-40 yrs and picks the best one for you.
Save this analysis · Email it to yourself or your CPA
Save a PDF for your records, or have Hans send it to you (or directly to your CPA) from hans@goldsteinco.net with the full math breakdown and IRS citations.
PDF saves locally. Email comes from hans@goldsteinco.net with the full report inline.
Your scenario + the full math breakdown + IRS citations + Hans's contact info. Forward it to your CPA for review.
No spam. One report. Reply-to is Hans directly if you have questions.
Four tools, one math engine
Each calculator answers a different question. Pick the one that fits yours.
Selling with an agent? The seller net sheet after tax starts from the price, takes out commission, closing costs and the payoff, then the tax: cash sale vs paid over time.
30-sec gut check
Quick Calculator
"Should I even consider SIS?"
Four inputs: sale, basis, income, term. One number out. Bracket-math expander shows the work.
Skip if: you need multi-year planning, QSBS/§1245, or retirement modeling.
Every factor a CPA cares about: §1202 QSBS · §1245 · §453A · §199A QBI · city transfer tax · §121 · prior 1031 carry. Color-coded live math breakdown, every formula visible.
Skip if: you want lifetime planning or bucket allocation.
Optimizes SIS term 5-40 yrs across your full retirement. Models RMDs (age 73/75), Roth conversion ladder, SS taxation (0/50/85%), IRMAA 2-yr lookback, bracket inflation. Year-by-year ledger with IRS citations on every formula.
Skip if: you don't have a pre-tax IRA/401k or you just want the year-1 number.
Honest order: If you're new here, start with Quick. If your CPA needs to verify the math, send them Tax-Detail. If you're planning how to actually deploy the proceeds, use Cash-Flow Planner. If you're age 55+ with a pre-tax IRA, the Lifetime Optimizer is the strongest tool. All four show the math.
What this calc handles: Federal LTCG (IRC §1(h)) · CA progressive (CA R&TC §17041) · NIIT 3.8% (IRC §1411) · §121 home exclusion · §1250 depreciation recapture · CA MHST. What needs a 20-min consult: QSBS founder stock (§1202) · §453A interest on big deals (>$5M) · SF/LA city transfer tax · Roth conversion ladder during your pre-RMD years · RMD/IRMAA interaction · IRD treatment at death · multi-state if you move out of CA · K-1 lumpy income · trust structures.
If any apply to you, that's the conversation. 213-414-2808
📚 Get the free Seller's Guide to §453 + a fit-check
A plain-English guide for sellers: how a structured installment sale defers the tax when you sell a business, practice, or property: the math, the alternatives, and how to know if your deal fits.
Drop your info: instant PDF download + within 1 business day Hans will email a preliminary read on which structure fits your deal. No retainer. On a funded structure, the insurer pays a one-time commission of about 4% of the amount structured to the brokerage firm that places it (Hans’s share is about 2.4%; no trail). It is built into the annuity pricing, not a separate fee.
📞 Hans Goldstein · 213-414-2808 · CA Insurance License #4273294 · Independent §453 specialist · Goldstein & Co. LLC
Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
What is a structured installment sale calculator?
It is a tool that compares two ways of taking the money from a sale. In a cash sale, the full gain is taxed in the year you close. In an IRC Section 453 structured installment sale, the buyer's payment funds a schedule of payments from a highly rated life insurer, and you recognize the gain and pay the tax as each payment arrives. The calculator estimates the federal, NIIT and California tax under both paths so you can see how much more you may keep.
How is a structured installment sale different from a structured settlement?
A structured settlement pays out a personal injury or wrongful death claim, and those payments are usually tax free under IRC Section 104. A structured installment sale spreads the proceeds of a business, property or practice sale, and each payment is taxable under IRC Section 453, only later and often at a lower bracket. This page is the sale calculator. If you are settling an injury claim, use the structured settlement calculator instead.
Does the calculator include California tax?
Yes. The estimate stacks federal long-term capital gains, the 3.8 percent net investment income tax, California income tax at your marginal rate, the 1 percent mental health surtax on income over $1 million, and unrecaptured Section 1250 gain at up to 25 percent where it applies (spread with the payments, taken first out of each one). California generally follows the federal installment method, so the state tax is also spread across the payment schedule. Rates and brackets change; treat the output as an estimate and confirm the numbers with your CPA before you close.
People also ask
What are the IRS rules for installment sales?
Under §453, if at least one payment arrives after the year of sale, you report gain as you are paid, on Form 6252 each year. The note needs adequate interest or interest is imputed. Recapture under §453(i) is taxed in year one, borrowing against the note counts as a payment under §453A(d), and notes over $5 million can owe the §453A interest charge.
How to calculate installment payment?
For a level payment, use the standard annuity formula: payment = amount financed × r ÷ (1 − (1 + r)^−n), where r is the rate per period and n the number of payments. The calculator does this for the term and rate you choose, then splits each payment into return of basis, taxable gain and interest so you can see the tax year by year.
How are capital gains taxed on an installment sale?
Each principal payment is taxed in proportion to your gross profit percentage: gain divided by contract price, fixed at closing. If that percentage is 80%, then 80% of each principal dollar is capital gain and 20% is tax-free return of basis. Interest is taxed separately as ordinary income, and recapture is taxed up front.
Is a structured installment sale worth it for my sale?
It tends to pay off when the gain is large enough to push a cash sale into the top brackets, when NIIT or IRMAA would hit, when a 1031 leaves boot, or when the buyer needs a seller who can wait. It helps less on small gains or when you need all the cash now. The calculator shows both outcomes so you can see which way your numbers fall.
