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Structured Installment Sales (SIS)

Defer Capital Gains & Secure Guaranteed Income

If you are selling a business, real estate, or high-value asset, you may be facing a significant capital gains tax bill. A Structured Installment Sale is a powerful financial tool that allows you to defer those taxes and convert your equity into a guaranteed stream of future payments.

How It Works

Instead of receiving a lump sum at closing (which triggers immediate taxation on the full gain), you agree to receive payments over time. This is facilitated through an assignment process where the buyer's obligation to pay is transferred to a highly-rated third-party assignment company, which funds the obligation by purchasing an annuity tailored to your needs.

Structured Installment Sale Flowchart

Key Benefits

  • Tax Deferral: You only pay taxes on the portion of the gain you receive in a given year, keeping you in a lower tax bracket and keeping more money working for you.
  • Guaranteed Income: Payments are fixed and guaranteed by top-rated life insurance companies.
  • Flexibility: You can design the payout schedule to meet your specific retirement or estate planning goals (e.g., monthly, quarterly, or annual payments).
  • Estate Planning: Guaranteed payments can continue to your beneficiaries in the event of your death.

Who Should Consider a Structured Installment Sale?

While an SIS is a powerful tool, it is specifically designed for high-value transactions where tax efficiency is a priority. It is an ideal strategy for:

  • Business Owners: Exiting a privately held company or selling to a successor.
  • Real Estate Investors: Selling commercial property, apartment complexes, or land who wish to avoid the strict timelines of a 1031 Exchange.
  • Agricultural Landowners: Farmers or ranchers selling land for development or retirement.
  • Professional Practices: Doctors, dentists, or veterinarians selling their practice to a corporate aggregator or partner.

Enhanced Security Over Traditional Seller Notes

In a traditional installment sale (seller-financed note), you are dependent on the buyer’s ongoing financial health to receive your payments. If the buyer defaults, you may be forced to foreclose or litigate.

The Castle Annuity SIS Advantage:

With our Structured Installment Sale, the buyer assigns their payment obligation to a third-party assignment company. This company purchases an annuity from a highly-rated life insurance company to fund your payments. Once this is established:

  • You are no longer reliant on the buyer’s creditworthiness.
  • Your income stream is backed by the financial strength of a major life insurance carrier.
  • You achieve a clean break from the asset and the buyer.

Structured Installment Sale vs. 1031 Exchange

Many real estate investors utilize 1031 Exchanges to defer taxes, but that requires you to roll your money into a new property within a strict 180-day window. An SIS offers an alternative for those who are ready to "cash out" rather than buy more property.

Feature 1031 Exchange Structured Installment Sale
Goal Swap for new property Create guaranteed income
Liquidity Money tied up in real estate Liquid payments over time
Management Active property management required Zero management (passive)
Important: The Timing Rule

To qualify for tax deferral under IRS rules, a Structured Installment Sale must be established before you sign the final closing documents or receive any funds. Once you have "constructive receipt" of the sale proceeds, the tax liability is triggered immediately.

Please contact us as early in the negotiation process as possible so we can coordinate with your broker and legal team.

IRS Codes & Resources

Structured Installment Sales are compliant with the Internal Revenue Code, specifically utilizing the Installment Method for reporting gains.

*Castle Annuity recommends consulting with your CPA or tax attorney to ensure an SIS is appropriate for your specific tax situation.

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Meet Our Team

William Ramsdale

William Ramsdale

William Ramsdale brings a wealth of experience to Castle Annuity, while having a degree in Accounting, he spent three decades in the IT industry as a dedicated DevOps professional. His career was defined by an analytical mind, attention to detail, and a commitment to building secure, reliable systems. Now, William leverages this unique skillset in the financial sector, applying his structured problem-solving abilities to help clients build and secure their financial futures through annuity solutions.