Fill out 6252 (Installment Sale Income) online
Form 6252 reports income from the sale of real or personal property under the installment method, where at least one payment is received after the tax year of the sale. This allows sellers to spread the gain recognition over the years they receive payments, rather than recognizing the entire gain in the year of sale.
How to fill out 6252 (Installment Sale Income)
Enter sale information
Describe the property sold, date acquired, and date sold. Enter the selling price, any mortgages assumed by the buyer, and your adjusted basis in the property.
Calculate gross profit percentage
Compute the gross profit (selling price minus adjusted basis and selling expenses) and divide by the contract price to get the gross profit percentage. This percentage determines how much of each payment is taxable gain.
Report payments received
Enter the total payments received during the current tax year (principal only, not interest). Multiply by the gross profit percentage to determine the installment sale income for the year.
Transfer to Schedule D or Form 4797
Report the installment sale income on the appropriate form: Schedule D for capital gain property, or Form 4797 for business or depreciable property. Report interest received on Schedule B.
About 6252 (Installment Sale Income)
Who needs this form
Sellers of real estate or other property who receive at least one payment after the year of sale and want to report the gain using the installment method. Common in seller-financed real estate transactions, land contracts, and owner-carry deals.
Where to submit
File with the IRS as part of your annual federal income tax return (Form 1040). You must file Form 6252 each year you receive installment payments.
Source and content freshness
- Filing deadlines may shift for weekends and holidays. Verify due dates with official instructions.
Common mistakes to avoid
- Incorrectly calculating the gross profit percentage (selling price minus adjusted basis, divided by selling price)
- Forgetting to file Form 6252 in subsequent years when receiving installment payments
- Not reporting depreciation recapture separately (it is taxed entirely in the year of sale, not spread over installments)
- Failing to account for selling expenses when calculating the adjusted basis
- Not recognizing that installment sales of depreciable property to related parties have special rules
Frequently asked questions
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Can I use the installment method for any property sale?
Most real property sales qualify for the installment method if at least one payment is received after the year of sale. However, the installment method is not available for sales of inventory, publicly traded securities, or property sold at a loss. For dealer sales of real property, special rules apply. You can elect out of the installment method by reporting the entire gain in the year of sale.
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