Installment Sale Generates Cash Flow

Installment sales of real property are usually thought of as a tax-planning strategy, but selling your home over time instead of all at once also can be a means to increase your monthly cash flow.

Consider this example: A widow sells her home and nets a profit of $100,000.  She invests that sum in a certificate of deposit at, say, 6 percent interest and earns $500 a month.  If the same transaction were structured as an installment sale at, say, 8.5 percent interest, she would receive $708 a month.  That’s an additional $208 each month or approximately $2,500 a year.

Despite the bottom-line benefit, a surprisingly large number of seniors sell their home for cash and stash the proceeds in a passbook savings account or other low-risk asset.  A seniors real estate specialist can explain the installment sale to you in greater detail.

Source: Senior Advantage Marketing Council

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