You sourced the buyer. You negotiated the LOI. Then the seller's CPA prices out the capital gains and depreciation recapture on a building they've owned for 25 years — and suddenly they're “going to hold another year.” The escrow that was 30 days out is now dead, and your commission died with it.
There's a structure the IRS wrote for exactly this moment — the IRC §453 Structured Installment Sale — that lets the seller spread the gain across future years on their own schedule. It reopens deals that stalled on tax. You stay the listing broker and collect your full commission.
A seller who's owned a $3M industrial or retail property since the '90s has a low basis and years of depreciation to recapture at 25%. Add federal cap gains, NIIT, and CA's 13.3% and the bite can top 35–40% of the gain. That's the number that freezes them.
Your seller doesn't want to trade into another management headache, can't find suitable replacement property in 45 days, or is staring at taxable boot. When the exchange doesn't pencil, the whole sale stalls — because “sell and pay the tax” feels like giving away a third of their life's work.
Buyer's at $3.8M, seller wants $4.2M, and neither will move. But the seller's real objection often isn't the price — it's what's left after tax. Change the after-tax math and the gap you couldn't close on price closes on structure.
Long marketing times on higher-priced assets give sellers room to second-guess. The tax hit is the excuse they reach for. Give them a way to control when they recognize the gain and “not ready” turns into “let's close.”
A Structured Installment Sale lets the seller take the proceeds as a stream of guaranteed payments over a schedule they choose — 5, 10, 20 years — so the gain is taxed as it's received instead of all at once. Lower brackets in most years, no single-year tax spike, and payments they can count on.
Want the numbers first? See the full math on a $4M deal. Want to understand why a seller stalls even when the deal is good? Read why sellers freeze at the closing table.
