31.4 Timing Your Real Property Sales

Generally, a taxable transaction occurs in the year in which title or possession to property passes to the buyer. By controlling the year title and possession pass, you may select the year in which to report profit or loss. For example, you intend to sell property this year, but you estimate that reporting the sale next year will incur less in taxes. You can postpone the transfer of title and possession to next year. Alternatively, you can transact an installment sale, giving title and possession this year but delaying the receipt of all or most of the sale proceeds until next year (5.21).