Who this is for
You have owned a vineyard, ranch, land or an investment property for many years. It has gone up in value, so your gain is large, often $500,000 or more. A cash sale puts all of that gain on one tax return. You want to know what you will keep and what your options are before you list.
The short version
Two common paths exist. A 1031 exchange lets you roll the gain into another property, and it works well when you want to keep owning real estate and can find the replacement on a tight clock. A structured installment sale works for sellers who would rather take the cash. The gain is taxed in the years you receive payments, so more of the sale stays yours instead of going out in one year.
It also helps with price. Many buyers cannot reach the number you hoped for. A structured installment sale can leave you with the same net, or more, at a lower price the buyer can actually pay. That can turn a stalled deal into a closed one.
An example, with the numbers
A married couple in California sells land they bought years ago for $400,000. They have no mortgage and $200,000 of other income each year.
| All-cash sale | Installment sale, same price | Installment sale, lower price | |
|---|---|---|---|
| Sale price | $2,000,000 | $2,000,000 | $1,731,000 |
| Selling costs | $112,200 | $112,200 | $97,109 |
| Total tax | $518,702 | $399,072 | $327,723 |
| You net, today’s dollars | $1,369,098 | $1,566,012 | $1,369,648 |
Read across: at the same $2,000,000 price, the couple nets about $196,900 more. Or the buyer can pay about $269,000 less and the couple still nets what the cash sale would have left them.
Assumptions, dated October 15, 2026. Married filing jointly, California, long-term gain, no mortgage, 5% commission, 0.5% escrow and title, county transfer tax estimated. Ten level yearly payments at a 5.0% payout rate. That rate is a planning assumption set for this sample on October 15, 2026 by Hans Goldstein, EA, not a quote or a published rate. The installment net is the present value of the payments at that rate, after tax on the interest. Tax figures use the 2026 federal and California rules built into the calculator on this site. Your numbers will differ.
Trade-offs, stated once
You do not get all of the money at closing, so this fits sellers who do not need every dollar on day one. The payments are a promise from the party making them, so who stands behind them matters, and your CPA should look at that. The structure is set at closing and is hard to change later. The figures depend on rates and tax law on the day you sell. And if you want to stay in real estate, a 1031 exchange may fit you better. Many sellers compare both.
Five questions to ask your CPA
- What is my adjusted basis, and how much of my gain is long-term gain versus depreciation recapture?
- Roughly what will federal, California and the net investment income tax cost if I take it all in one year?
- Would spreading the gain over ten years keep me in lower brackets, and by how much?
- Does a 1031 exchange fit my plans, and can I realistically find replacement property in 45 and 180 days?
- If a buyer needs a lower price, what price still leaves me with the same net after tax?
Next step
Put in your own price, basis and mortgage and see your numbers both ways. Then, if you want to talk it through, Hans can go over it with you. That conversation is separate from your listing agreement.
On the live site this link goes to Hans Goldstein, Tax & Exit Planning (bigsaletax.com). Also see Selling a ranch or vineyard.
General information, not tax or legal advice. Talk to your own CPA or attorney before you decide. Estimates only. This page is a sample prepared for a demo.
Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS. General education, not tax or legal advice for your situation.