Can I structure only part of my sale?
Yes. You can structure any portion of the price and take the rest in cash at closing. The cash is not treated as your basis first: every dollar, cash or structured, carries the same gross profit ratio, so cash at closing brings its share of gain into year one. You can also split the structured amount into several structures, each meeting its insurer's minimum.
Buyer cash → Assignment Co. → fixed annuity → You, on schedule
Hans Goldstein structures installment sales for sellers and works alongside their CPAs. Email hans@goldsteinco.net or call 213-340-2018.
How is the cash at closing taxed?
By the gross profit ratio: gross profit divided by contract price (Temp. Treas. Reg. §15a.453-1(b)(2)). Cash at closing is a payment in the year of sale, and it carries that ratio of gain like every later payment. You cannot take your basis back first in cash and structure only the gain.
The full explanation, with a simple example, is on should you structure the whole deal or just the gain?. The short version: each dollar you take at closing pulls its share of gain into year one.
On top of that, any §1245 recapture is taxed in full in the year of sale, whether or not you take cash (IRC §453(i)). And if your mortgage is paid off from closing proceeds, that payoff is cash you received at closing.
What does that look like with real numbers?
What is the tax bill on your sale going to be?
Send me the sale price and rough basis. Within one business day I'll email you the actual number and 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.
Illustrative facts: married filing jointly, $150,000 of other taxable income each year, a $2,500,000 sale, $1,000,000 adjusted basis, no selling expenses, no depreciation recapture, no mortgage. Federal tax uses 2026 married-filing-jointly brackets (Rev. Proc. 2025-32) plus the 3.8% NIIT; state tax extra. Interest on the payments is ignored.
Year one. $360,000 of gain on top of $150,000 of other income: about $54,000 of federal capital gains tax (all at 15%) plus about $9,900 of NIIT, roughly $63,900.
Later years. If the $1,900,000 pays as 10 level annual payments of principal, each carries $114,000 of gain: about $17,100 of federal tax plus about $500 of NIIT, roughly $17,600 a year, about $176,000 over ten years.
All cash instead. The full $1,500,000 gain in one year: about $301,800 of federal tax (much of it at 20%) plus about $53,200 of NIIT, roughly $355,000.
Structured this way, total federal tax on the gain is about $240,000 against about $355,000 for an all-cash sale. Your numbers will differ; have your CPA run them.
Can I split the structured amount into several pieces?
Yes. You might want one structure paying monthly for 10 years and another paying a lump sum in year 12, or pieces at two different insurers. Each piece is its own annuity, and each must clear its insurer's minimum on its own. See minimum sale size. Each piece is fixed at closing; none can be accelerated, borrowed against or cashed out later.
The gross profit ratio is figured once for the whole sale, so every structured piece carries the same 60% in the example above.
Can I combine a structured sale with a 1031 exchange?
On different portions, yes, if both are set up before closing. Proceeds that go to the qualified intermediary are exchange funds; they cannot be structured afterward. Cash or other non-like-kind property you receive in a 1031 is boot, and boot can be reported on the installment method. See 1031 exchange boot.
If you want a structured sale ready in case the exchange fails, the purchase agreement has to route the structured amount to the assignment company at closing. It cannot be bolted on later. See can a structured sale back up a failed 1031?
How does §453A affect how much I structure?
§453A charges interest on the deferred tax when the face amount of your installment obligations from sales over $150,000 that arise in the year and are outstanding at year end exceeds $5,000,000 (§453A(b)(2)). Keeping the structured face amount at or under $5,000,000 avoids the charge. In the example, $1,900,000 is well under. On a larger sale, some sellers structure up to the threshold and take the rest in cash. Personal-use and farm property are excluded (§453A(b)(3)). See the §453A interest charge.
Frequently asked
Q: Can I take my basis in cash and structure only the gain? A: No. Every payment carries the same gross profit ratio. Cash at closing brings its proportional share of gain into year one.
Q: Is there a minimum I have to structure? A: Yes, set by the insurer per structure, measured on the amount structured, not the sale price. See minimum sale size.
Q: Can I use part of the proceeds for a 1031 and structure another part? A: On separate portions, if both are arranged before closing. Funds sent to the qualified intermediary cannot later be structured.
Q: Does structuring more always save more tax? A: More of the gain is deferred, but whether that saves tax depends on your brackets each year. It also locks up more money. Take what you need in cash.
What should you read or run next?
- What is taxed in the year of sale?
- What is the minimum for a structured installment sale?
- Can a structured sale back up a failed 1031?
- What payment schedules can I choose?
- Structure the whole deal or just the gain?
- The §453A interest charge
- Gross profit percentage calculator
- All structured installment sale questions
Who wrote this?
Find out what your sale is really going to cost you in tax, and what you can do about it
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.
Send me the sale price and roughly what you paid. Within one business day I’ll come back with the number you’re actually looking at and whether a structured installment sale can push it down. If it can’t, I’ll say that just as plainly.
You'll also get the plain-English Seller's Guide to §453: the math, the alternatives, and the cases where it does not work.
📞 Hans Goldstein · 213-340-2018 · 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.
Run your specific numbers
The calculator runs your sale through real 2026 federal + state tax brackets and shows §453 savings vs lump sum side-by-side.
Run the calculator → 213-340-2018