{"id":20622,"date":"2020-06-14T12:00:00","date_gmt":"2020-06-14T17:00:00","guid":{"rendered":"https:\/\/www.hrblock.com\/tax-center\/"},"modified":"2023-08-29T08:19:49","modified_gmt":"2023-08-29T13:19:49","slug":"installment-sales","status":"publish","type":"post","link":"https:\/\/www.hrblock.com\/tax-center\/irs\/forms\/installment-sales\/","title":{"rendered":"Installment Sales &#8211; Form 6252"},"content":{"rendered":"<h2>What is an Installment Agreement?<\/h2>\n<p>An installment agreement is one where you receive at least one payment after the end of the tax year when the sale occurs. If you realize a gain on an installment sale, you might be able to report part of the gain when you receive each payment. This method of reporting gain is called the installment method.<\/p>\n<h2>What Sales Don\u2019t Qualify for Installment Sales?<\/h2>\n<p>Certain types of sales don\u2019t qualify as installment sales, including:<\/p>\n<ul>\n<li>Sale of inventory items<\/li>\n<li>Sales made by dealers who regularly sell the same type of property<\/li>\n<li>Sale of stocks or other investment securities<\/li>\n<li>Sale that results in a loss<\/li>\n<\/ul>\n<p>As the seller, you aren\u2019t required to report an installment sale using this method. However, you might want to do so since you can spread the tax over all the years the buyer makes installment payments. You can do this instead of paying the tax on your gain all in one year.<\/p>\n<h2>Enter the Installment Sales Form<\/h2>\n<p>Installment sales should be reported on the Installment sales form, referred to by the IRS as Form 6252.<\/p>\n<h2>How is Form 6252 Used?<\/h2>\n<p>You\u2019ll use Form 6252 to report installment sale income from casual sales of real or personal property.<\/p>\n<p>Each payment you receive has three parts:<img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-51490 alignright\" src=\"https:\/\/www.hrblock.com\/tax-center\/wp-content\/uploads\/2017\/06\/interest-income-300x169.jpg\" alt=\"interest income\" width=\"300\" height=\"169\" srcset=\"https:\/\/www.hrblock.com\/tax-center\/wp-content\/uploads\/2017\/06\/interest-income-300x169.jpg 300w, https:\/\/www.hrblock.com\/tax-center\/wp-content\/uploads\/2017\/06\/interest-income.jpg 500w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<ul>\n<li><a href=\"https:\/\/www.hrblock.com\/tax-center\/income\/investments\/interest-income\/\">Interest income<\/a><\/li>\n<li>Return of your basis<\/li>\n<li>Gain on the sale<\/li>\n<\/ul>\n<p>For each year you receive a payment or are treated as receiving a payment, you must include in your income both:<\/p>\n<ul>\n<li>Interest<\/li>\n<li>Portion of the gain<\/li>\n<\/ul>\n<h2>Interest Income Reported on IRS Form 6252<\/h2>\n<p>You must consider a part of each payment you receive as interest. This applies even if the agreement you reached with the buyer didn\u2019t include interest. The interest portion is taxed as ordinary income and doesn\u2019t have any special tax rates.<\/p>\n<p>To learn more about the interest income you must report, see Publication 537: Installment Sales.<\/p>\n<h2>Return of Your Basis and Gain on the Sale<\/h2>\n<p>After you figure the interest portion of your payment, you\u2019re left with these two parts:<\/p>\n<ul>\n<li>Tax-free return of your adjusted basis in the property<\/li>\n<li>Your gain referred to as installment sale income on Form 6252<\/li>\n<\/ul>\n<h2>What Information Will You Need to Complete IRS Form 6252<\/h2>\n<p>You\u2019ll need this information to complete IRS form 6252:<\/p>\n<ul>\n<li>Selling price \u2014 This is the total cost of the property to the buyer. It includes any selling expenses the buyer paid.<\/li>\n<li>Adjusted basis \u2014 This is your <a href=\"https:\/\/www.hrblock.com\/tax-center\/income\/real-estate\/how-to-calculate-cost-basis-for-real-estate\/\">basis in the property<\/a>, modified by:\n<ul>\n<li>Additions or subtractions to basis while you held the property<\/li>\n<li>Selling expenses you paid<\/li>\n<\/ul>\n<\/li>\n<li>Depreciation you recaptured \u2014 You could be subject to depreciation recapture when selling certain property. This applies to property that\u2019s eligible for depreciation methods other than straight-line depreciation. You need this amount to figure the gain from the sale.<\/li>\n<\/ul>\n<p>Recaptured depreciation will be repaid in the year of the sale, so subtract the amount of depreciation you took in previous years from your basis in the property. Both of these apply to any depreciation recapture:<\/p>\n<ul>\n<li>It will be taxed as ordinary income.<\/li>\n<li>It isn\u2019t eligible for capital gain rates.<\/li>\n<\/ul>\n<h2>Where to Go For More Tax Form Help<\/h2>\n<p>To learn more about installment sales or depreciation recapture, get the help of tax pros. Whether you&nbsp;<a href=\"https:\/\/www.hrblock.com\/tax-offices\/local-offices\/#!\/en\/office-locator\/\">make an appointment<\/a>&nbsp;with one of our knowledgeable tax pros or choose one of our&nbsp;<a href=\"https:\/\/www.hrblock.com\/online-tax-filing\/\">online tax filing<\/a>&nbsp;products, you can count on H&amp;R Block to help you complete tax forms with accuracy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is an Installment Agreement? An installment agreement is one where you receive at least one payment after the end of the tax year when the sale occurs. If you realize a gain on an installment sale, you might be able to report part of the gain when you receive each payment. This method of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":51490,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[25,55],"tags":[],"class_list":["post-20622","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-irs","category-forms"],"acf":[],"yoast_head":"<title>Installment Sales - Form 6252 | H&amp;R Block<\/title>\n<meta name=\"description\" content=\"Learn more about installment sale income and IRS Form 6252 from the tax experts at H&amp;R Block.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.hrblock.com\/tax-center\/irs\/forms\/installment-sales\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Installment Sales - Form 6252\" \/>\n<meta property=\"og:description\" content=\"Learn more about installment sale income and IRS Form 6252 from the tax experts at H&amp;R Block.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.hrblock.com\/tax-center\/irs\/forms\/installment-sales\/\" \/>\n<meta property=\"og:site_name\" content=\"H&amp;R Block\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/hrblock\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/hrblock\" \/>\n<meta property=\"article:published_time\" content=\"2020-06-14T17:00:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-08-29T13:19:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.hrblock.com\/tax-center\/wp-content\/uploads\/2017\/06\/interest-income.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"500\" \/>\n\t<meta property=\"og:image:height\" content=\"282\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"H&amp;R Block\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@HRBlock\" \/>\n<meta name=\"twitter:site\" content=\"@hrblock\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"H&amp;R Block\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/resource-center.hrblock.com\\\/irs\\\/forms\\\/installment-sales\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/resource-center.hrblock.com\\\/irs\\\/forms\\\/installment-sales\\\/\"},\"author\":{\"name\":\"H&amp;R Block\",\"@id\":\"https:\\\/\\\/resource-center.hrblock.com\\\/#\\\/schema\\\/person\\\/0451551be86ad17708cdd08a71391fcf\"},\"headline\":\"Installment Sales &#8211; 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