Installment Sale Note Structure Calculator

Installment sales defer gain recognition and generate interest income.

Sale price

Down payment %

Note term years

Interest rate %

Monthly payment

$148,509

Note balance

$7,500,000

Total interest

$1,410,539

How the math works

Note = sale − down payment. Monthly = standard amortization. Interest = total − principal.

$10M × 25% = $2.5M down. $7.5M × 7% × 5 yrs = $148.5k/mo. $1.41M total interest.

How to Use

Enter sale price.
Enter down payment %.
Enter note term years.
Enter interest rate %.
Read annual installment structure.

Frequently Asked Questions

Installment mechanics?

Seller receives down payment + promissory note. Buyer pays principal + interest over term. Seller recognizes gain pro-rata as principal received. Interest income taxable each year. IRS Form 6252.

Typical structures?

20-30% down, 5-7 year term, 6-9% interest. Balloon common at year 5 (buyer refinances out). Longer terms (10-30 years) for owner-financed residential. Higher interest rates than bank financing (300-500 bps premium).

Risk vs benefit?

Seller risk: buyer default on note. Benefit: tax deferral + interest yield above bank savings. Best for: family transfers, distressed buyer (improved terms), real estate investors (long-term cash flow). Worst for: buyers with marginal credit.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.