Is there an age limit for a structured installment sale?

Hans Goldstein structures installment sales for sellers and works alongside their CPAs. Email hans@goldsteinco.net or call 213-414-2808.

Why does age not matter?

In a structured installment sale, the buyer pays the full price at closing and the deferred portion goes to an assignment company, which buys a fixed annuity to fund your payments. The standard version is period-certain: say $150,000 a year for 10 years. The insurer owes those payments whether you are alive or not, so it has no reason to ask your age or your health.

An age question only appears in the optional life-contingent version, where payments run for your lifetime. That is a different tool and rarely used on a straight sale.

Sellers often ask "Am I too old for this?" first. The better first question is "How big is the gain, and how much of it would land in one year?"

What happens if I die before the payments end?

Nothing is forfeited. The remaining payments go to the beneficiary you named, or to your estate, on the same schedule. Two things to plan for:

• No step-up on the unpaid gain. Property you still own at death gets a stepped-up basis. An installment obligation does not: the deferred gain is income in respect of a decedent under IRC §691(a)(4), and your heirs report it as the payments come in. For a seller in poor health who would otherwise hold the property until death, holding may beat selling. See income in respect of a decedent.
• Pick the term with your heirs in mind. Older sellers often choose shorter terms, or name a trust as beneficiary so the payments follow the estate plan. See what happens to the payments when I die.

Which limits actually shape the deal?

The §453A $5,000,000 line

If the installment obligations you hold at year end (from sales over $150,000) total more than $5,000,000, IRC §453A charges interest on the deferred tax tied to the excess, at the IRS underpayment rate. Structured amounts at or under $5,000,000 carry no interest charge. Above it you keep the deferral and pay interest on the excess, which is why larger sales are sometimes split across tax years or across spouses who each sell their own interest. Farm property and personal-use property are excepted. See the §453A interest charge.

At least one payment after the year of sale

An installment sale needs at least one payment received after the close of the tax year of the sale (IRC §453(b)(1)). Typical structured terms run 5 to 30 years, and the start date can be pushed out to aim income at lower-bracket years; the available range depends on the insurer’s product. See payment schedule options.

It must be set before closing

The structure and assignment have to be in the closing documents. Once you have received the cash, constructive receipt closes the door: you cannot take the money and defer it afterward. The most common way a seller loses this option is starting the conversation too late. See constructive receipt and the timeline.

It is locked once set

The term, amounts and schedule are fixed. You cannot speed up, cash out or change the payments, and pledging an obligation over the $5,000,000 line as loan collateral is treated as a payment under §453A(d). See can I speed up or borrow against the payments?

What §453 will not defer

• Depreciation recapture under §1245 is taxed in the year of sale whatever the payment schedule (§453(i)).
• Dealer property and inventory do not qualify (§453(b)(2)).
• Publicly traded stock and securities are excluded (§453(k)(2)).

See what doesn’t work for a structured installment sale and the minimum sale size.

Sources: IRC §453, §453A and §691, checked October 8, 2026. Hans is not a CPA or attorney; have your tax advisor confirm the treatment for your sale.

Frequently asked

Q: Can a 90-year-old do a structured installment sale? A: Yes. The payments run for a fixed term, not for a lifetime, so the insurer does not underwrite the seller. Age only affects which term makes sense and who you name as beneficiary.

Q: Do I need a medical exam? A: No. A period-certain structure has no measuring life, so there is nothing to underwrite. Only the optional life-contingent version, which pays for your lifetime, looks at age.

Q: What happens to the payments if I die during the term? A: They continue to your named beneficiary or your estate on the same schedule. The unpaid gain is income in respect of a decedent (IRC §691(a)(4)), so it does not get a step-up in basis and your heirs pay tax on it as the payments arrive.

Q: Is there a dollar limit? A: No hard cap, but if your installment obligations outstanding at year end total more than $5,000,000, IRC §453A adds an interest charge on the deferred tax tied to the excess. You keep the deferral; you pay interest on the part above the line.

What should you read or run next?

• What happens to the payments when I die?
• What is the minimum for a structured installment sale?
• The §453A interest charge above $5 million
• What doesn’t work for a structured installment sale
• How a big sale hits Medicare IRMAA
• Capital gains exit calculator

Who wrote this?