Structured Installment Sale
Defer capital gains taxes through the Iron Gate Holdings Trust. Predictable installment payments, no constructive receipt, IRS-compliant under §453 + Pub 537.
What is a Structured Installment Sale (SIS)?
A Structured Installment Sale is a financial strategy that allows sellers of high-value assets — real estate, businesses, collectibles, or appreciated residential property — to defer capital gains taxes. Instead of receiving sale proceeds directly (which would trigger immediate taxation), the funds are directed from escrow into the Iron Gate Holdings Trust. The seller receives a promissory note outlining a structured series of payments that include both principal and interest over a set term (5, 10, 15, or 20 years).
SIS is built for sellers with capital gains under $1 million. For larger gains, see our 537 Installment Sale Trust.
Best suited for sales of:
Investment Property
Rental real estate, commercial buildings, raw land.
Collectibles
Art, classic cars, fine wine, rare coins, and other appreciated assets.
Businesses
Sole proprietorships, partnerships, LLCs, and S-corp interests.
Highly-Valued Residential
Primary residence sales above the §121 exclusion.
Why use a Structured Installment Sale?
When selling a major asset, sellers often face substantial capital gains taxes. Depending on their tax bracket, these taxes can eat up over 20% of the profit — before accounting for any state-level taxes. This immediate tax obligation reduces the capital available for reinvestment, retirement, or wealth preservation.
Defers capital gains taxes over time (IRC §453)
Avoids a large upfront tax payment
Keeps seller in a lower tax bracket
Earns interest on pre-tax funds (compounding power)
Predictable income via scheduled principal + interest
Estate planning flexibility with structured distributions
How a Structured Installment Sale works
Instead of receiving sale proceeds directly, the funds go to the Iron Gate Holdings Trust and you receive a promissory note. This note pays you interest + principal over a selected timeframe, allowing you to avoid immediate tax recognition.
Promissory Note Issued
You select the payment terms for a secured note that match your income goals. Our team administers the note, and both parties sign. The trust issues the note to the seller, detailing payment amounts, interest rates, and terms.
Asset Sold & Escrow Funds Enter Iron Gate Holdings Trust
Instead of releasing the funds to the seller, escrow sends them to the Iron Gate Holdings Trust in the form of a loan from the seller. At the close of escrow, the proceeds enter the trust directly. The buyer deposits funds into the escrow account.
Deferred Taxation Begins
The seller receives regular payments according to the promissory note. The seller defers the capital gains tax burden while collecting predictable income.
The Promissory Note: principal + interest
At the heart of a SIS is the promissory note issued by the Iron Gate Holdings Trust to the seller. This legal document outlines the amount owed, the repayment period, and the interest rate. Depending on the term selected, the payment structure can vary significantly:
10-Year Note
6%Fully amortized payments at 6% fixed, or 6% interest-only for five years followed by a balloon payment of principal at the end.
15-Year Note
6.5%Fully amortized payments at 6.5% fixed, or 6.5% interest-only for five years followed by a balloon payment of principal at the end.
20-Year Note
7%Fully amortized payments at 7% fixed, or 7% interest-only for five years followed by a balloon payment of principal at the end.
The role of escrow and the trust
Escrow ensures all sale conditions are satisfied and securely handles the transaction. The Iron Gate Holdings Trust receives the sale funds and acts as the intermediary, managing the money and issuing payments to the seller according to the terms of the promissory note. This legal structure is crucial for avoiding constructive receipt.
Constructive receipt: what it means and why it matters
Constructive receipt is a tax principle where income is considered received when it is made available to the taxpayer, even if not physically in hand. SIS avoids constructive receipt because the seller never directly touches the sale proceeds — the funds go from escrow to the Iron Gate Holdings Trust. This key distinction qualifies the transaction for tax deferral under IRC §453.
What IRS code does a SIS follow?
SIS follows IRS Code Section 453 and Publication 537, which outline the installment method for spreading taxable gain over multiple years. It is fully IRS-compliant and widely used for large sales.
IRC Section 453
Allows taxpayers to defer capital gains taxes when they sell an asset and receive payments over time, rather than in a lump sum. You only pay taxes on the gain as each installment payment is received. This method spreads out the tax burden and helps keep sellers in a lower tax bracket.
IRS Publication 537
The official IRS guide explaining how to report income from an installment sale. Provides clear rules on calculating gain, reporting interest, and maintaining compliance under §453. Also explains how to avoid constructive receipt that would trigger immediate taxation.
How we stay compliant:
- ✓No constructive receipt — seller never touches the funds
- ✓No personal loans or backdoor access to the trust (no monetizing)
- ✓A fiduciary trustee manages the assets
- ✓Secured promissory note terms are documented and transparent
Get your custom SIS Revenue Estimator Report
See exactly how a Structured Installment Sale would work for your asset. Free, personalized report covering total tax liability with and without SIS, expected payments for 5, 10, 15, and 20-year options, pre-tax investment growth over the note's life, and side-by-side projections vs. a traditional sale.
Get my free SIS reportFrequently asked questions
Is a Structured Installment Sale legal and IRS-compliant?
Yes. SIS is fully compliant with IRS regulations when structured correctly. It is based on IRS Code Section 453 and detailed in IRS Publication 537, which allow for the deferral of capital gains taxes through installment sales. The key is avoiding constructive receipt by routing funds through the Iron Gate Holdings Trust — not directly to the seller.
What happens at the end of my note term? Can I refinance or extend?
Yes. When your SIS note reaches the end of its term — whether 5, 10, 15, or 20 years — you have the option to refinance or roll the balance into a new installment agreement. This can continue tax deferral or adjust your income structure based on new financial goals.
Can I access my funds early if I need them?
SIS is designed for long-term planning, but custom liquidity strategies can be incorporated during setup. In some cases you may negotiate early access or adjust payment structures during refinancing. Accessing large sums early may trigger partial tax recognition, so it should be planned carefully with your Iron Gate Holdings representative.
What happens if I pass away before the note is fully paid?
If the note holder passes away, the remaining balance of the SIS note is transferred to their heirs or designated beneficiaries as part of the estate. The trust and note structure remain intact, continuing to pay out under the original terms. This makes SIS a powerful tool for estate planning and intergenerational wealth transfer.
How do I choose between a 5-, 10-, 15-, or 20-year payment structure?
5-Year offers interest-only payments with a balloon — more liquidity early. 10-Year offers 6% with full amortization — balance of cash flow and deferral. 15-Year at 6.5% gives higher compounding and more income. 20-Year at 7% delivers maximum tax deferral and long-term wealth growth. Request a custom estimator to compare your options based on your asset, tax profile, and retirement goals.
Ready to start your tax-deferral journey?
Schedule a 15-minute call to learn whether a Structured Installment Sale fits your sale.