Installment Sale Property - sold verses disposed

Forum|Forum|3 years ago
March 11, 2023
1 reply
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I found the "What is an installment Sale" solved post helpful UNTIL I navigated further in TT.

I have a land contract for which I received some payments in 2022 and expect to receive payments in future years. I want to manage as an installment sale and claim the income in each year it is received.

BUT, when I select "Sold or disposed of this property in 2022" (a rental property), the help box states,"Do not check this box if the disposition was reported using the installment method, UNTIL THE FINAL YEAR OF PAYMENT.” This help box is titled,"Explain Disposed of Property" ...

So, given the very definition of "installment sale" (...expect to receive at least one payment after the end of the current year), this seems to be a conflict.

Do I check "Sold or disposed ..." and ignore the info on "disposed"?

Perhaps the 2 choices should be separated, ___sold separate from ___disposed of?

Best answer by PatriciaV

Correct: I can't continue unless I answer yes or no.

I need to answer no. When I answer no, the window is,"Enter the Asset Sale then Come Back" .

"Return to your business or rental activity and report the sale of this asset." (BUT the sale is not final, so I can't enter it under rentals).

If I answer yes, the steps let me continue (but what are the implications in the records?)

The statements you see after checking "No" are reminders to report the sale of the asset under the related activity under normal circumstances. In the case of an installment sale, this reminder is premature since you won't record the sale until the final installment payment. Answer "Yes" and ignore these reminders -- this option has no effect on your tax return.

@TangledMess

PatriciaV

Employee

Please clarify where you entered this installment sale. Was this under Less Common Income >> Installment Sales? Or did you choose another topic? Also clarify if this was vacant land or a rental property.

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TangledMessAuthor

This is an occupied rental property. we entered a land contract with the occupying tenant.

I entered the installment sale under Rental properties, "Do any of these situations apply to this property?" (sold or disposed)...then read the "learn more" to see the confusing information.

RobertB4444

It's not conflicting, just confusing.

In the case of an installment sale you have neither sold nor disposed of the property. It is technically still yours until the final payment is received at which point ownership is transferred.

Until then you still have a lien on the property which you would exercise if the party that you sold the land to defaulted on their payments. That is why you don't check the box until you receive the final payment at which point it is 'sold'.

@TangledMess

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