Cash sale
All the gain in the year of sale.
For financial advisors
Advisor Calculator: Cash Sale vs Structured Installment Sale
Your client is selling appreciated real estate. Compare a cash sale with a structured installment sale on the two numbers you answer for: the client's after-tax wealth, and your revenue. The client's result comes first. If the cash sale leaves the client better off, that is the advice. Everything runs in your browser.
The client's sale
Running the numbers…
1. Client after-tax wealth
Invested balance after fees. For the structure, payments still owed are added at their after-tax value, discounted at the payout rate, so the lines compare like with like.
Cash saleStructured sale
2. Assets under management
What you actually manage. A structure starts at zero and fills as each payment lands after its tax.
Cash saleStructured sale
3. Your cumulative revenue
Advisory fees to date. Turn on "I'm life-licensed" to add the one-time commission track.
Year by year
The tax, and beyond the tax bill
Structured sale
Gain taxed as the principal arrives; interest taxed as received.
Beyond the tax bill
Costs a sale year causes that are not the tax on the gain, from the same engine. Only the sale's own income counts here (other income, gain and note interest), not portfolio income.
Commission and conflicts
A commission is a conflict of interest, and it points toward recommending a structure. It is paid once by the insurer, built into the payout rate (a program that pays more commission may pay the client a lower rate) and only to a licensed, appointed agent. It must be disclosed in writing before the client decides, and the recommendation has to stand on the client's numbers alone. Many firms also require Form ADV disclosure, outside business activity approval or an offset against advisory fees. Check with your compliance department before you rely on any of this.
The rates and commission range here are illustrative. Hans Goldstein, the licensed insurance agent who operates this site, may be paid a commission by the insurer when he places a structure, about 2.4% of the amount structured (his share of about 4% paid to the brokerage). See how this site is paid.
A real client case
Have Hans run the case with you
Send the numbers above. Hans runs them through the full engine with real payout quotes for the schedule, and walks you and the client's CPA through the side-by-side, including the cases where the cash sale wins. You keep the client relationship. You can also call 213-340-2018.
- Real quotes on the client's schedule, not the illustrative rate
- Client outcome first; the CPA and your compliance team stay in charge
- How Hans is paid is in the disclosures
How the calculator works
The tax comes from the same planning engine as every calculator on this site: 2026 federal law including the alternative minimum tax, the 3.8% net investment income tax and the Section 1(h) worksheet, plus state tax, with 2026 tables held flat for later years. The cash sale pays all of it in the year of sale. The structure pays tax on each year's share of the gain as the principal arrives, and on the note interest as it is received.
The portfolio model is deliberately simple, and it is the same one used in Hans's advisor guide, More to Manage (draft):
- Cash sale: the after-tax proceeds are invested at closing.
- Structure: level annual payments at each year end, starting in the sale year; each is invested after that year's tax. Cash kept at closing is invested at closing, net of its share of the tax.
- Same gross market return on both sides, and the advisory fee charged on the year-end balance.
- No tax on portfolio growth on either side. This favors the cash sale, because the structure's interest is taxed every year while the cash seller's growth is not taxed here at all.
- Commission (life-licensed only): one payment at placement, a percentage of the amount structured. It is built into the payout rate, so the client numbers already reflect it.
With the defaults ($5,000,000 sale, $4,000,000 gain, California, married filing jointly, 6% gross, 1% fee) it reproduces the guide's headline table: the 3-year structure leaves the client about $105,000 behind at year 20, the 5-year about $210,000 ahead and the 10-year about $552,000 ahead.
Reading the results honestly
- Assets under management start lower with a structure, for as many years as the payments run. Short structures fill the account fast; long ones take years.
- Above the break-even return, the cash sale wins for the client, because money invested on day one compounds longer than the tax saved.
- Fee-only, the cumulative catch-up can take decades. Against a cash sale that would have come to you, the early fee shortfall is large. Against proceeds headed to a 1031 exchange, a Delaware statutory trust or the bank, every dollar of fee is new.
- Structured payments are fixed. They can't be sped up, borrowed against or cashed out. Money the client may need belongs in the cash piece.
What it leaves out
Selling costs, a loan paid off at closing, suspended passive losses, Section 1245 recapture, portfolio taxes, inflation, the ยง63(f) extra standard deduction at 65, state tax after a move, the Section 453A interest charge above $5,000,000 of deferred obligations (the engine adds it to the tax when it applies), and the counterparty: payments are owed by an assignment company and depend on its ability to pay, funded by an annuity or funding agreement from a life insurer. Not covered by FDIC, and possibly not by any state guaranty association. For the seller's side of the same numbers, use the installment sale calculator.
Advisor FAQ
Does a structured installment sale reduce my assets under management?
At first, yes. A cash sale puts the after-tax proceeds in the account on day one. A structure fills the account as each payment arrives, after its tax. Once the last payment lands, a structure that saved enough tax leaves a larger account than the cash sale would have, and it stays larger at the same market return.
When does the cash sale win for the client?
When the structure saves little tax (a short term on a large gain, or a state with no income tax), when the market return is above the break-even return the calculator shows, or when the client needs the money. Medicare premium surcharges in the payment years can also eat into the savings. If the cash sale leaves the client better off, that is the advice.
Can a fee-only advisor be paid on a structured sale?
Through the advisory fee on the proceeds as they arrive and are managed. An advisor without an insurance license cannot be paid an insurance commission. Running the side-by-side and introducing a licensed agent is advisory work; quoting and placing the contract is the agent's. Check with your compliance department.
How is a commission on a structured sale paid and disclosed?
The insurer pays it once, when the structure is placed, to a licensed and appointed agent. It is built into the payout rate rather than billed to the client, and it varies by program, term and brokerage split. It is a conflict of interest: disclose it in writing before the client decides, and follow your firm's Form ADV, outside business activity and fee offset policies.
Why does the calculator ignore taxes on the portfolio?
To keep the comparison clean and to lean toward the cash sale. In a real taxable account, the cash seller would pay more tax on income and realized gains in the early years, because more money is invested early. Ignoring that makes the structure's result conservative.
Fiduciary first, and who built this
Educational estimates on stated assumptions, for financial professionals. Not tax, legal or investment advice, not a recommendation of any investment, return or product, and not reviewed by any firm's compliance department. Check with your compliance department before any referral, compensation or disclosure decision. Results are illustrative, not typical or promised; assumed returns don't predict future results. No insurer is named here on purpose.
Built by Hans Goldstein, a licensed insurance agent, CA Insurance License #4273294. He has passed the enrolled agent exam but is not an enrolled agent until the IRS grants enrollment, and he is not a CPA, an attorney or a registered investment adviser. Insurance products are offered through Goldstein & Co. LLC dba Goldstein Insurance Services.