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Installment sale to relative is allowed

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Q: I own real estate that I plan to sell to my son through an installment sale. My CPA says this can't be done because we're related parties. Is this true? D.R.T., St. Petersburg, Fla.

A: No, it's not true. You can spread out the tax over two years or more if you sell real estate via the installment sale, even if you're selling to a related party. But if that related party then resells the property within two years of the transaction, you must pay tax on the remaining deferred gain in the year your relative sells the property. Note that "related parties" for this purpose include corporations that you own or partnerships in which you're a partner.

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