What is a Structured Sale? – PART 1

by | BiggerPockets.com

We’re going to do a 2 part series on Structured sales, here on the BiggerPockets Blog. This is a subject that many people don’t know about and I thought was worth exploring. The series was written by Trevor Mauch, as a guest piece on the blog.

Note: We cannot speak for against this type of strategy, and we advise anyone to do their homework before conducting any type of real estate strategy. BiggerPockets does not necessarily advocate or agree with the beliefs, expressions or opinions of our writers.

What is an Ensured Installment Sale? (aka Structured Sale) – PART 1

An Ensured Installment Sale (Structured Sale) is a new twist on the traditional installment sale that enables both the seller and buyer of appreciated assets to take advantage of tax, safety, and/or financial benefits that traditional sales methods don’t offer. This method was developed by Allstate Insurance company in 2005 and is becoming a sought after method for tax deferral when selling a business or real estate.

As you may know, an Installment Sale is basically the sale of an appreciated asset where at least 1 payment is to be received in the year(s) after the year that the sale occurs. Installment Sales allow the seller to defer gain to the year that payment is received. This is a powerful tool that helps sellers to defer capital gains tax rather than having to pay the entire tax in the year of sale. One huge drawback to the traditional Installment Sale is that the seller takes on the risk that the buyer will not fulfill the payment agreement or the property value will decrease. If the buyer defaults the seller has to take back the property or business.

The Ensured Installment Sale, however, transfers the buyers obligation to pay to a third party assignment company (affiliated with Allstate Insurance or another Fortune 100 company) who in turn purchases an annuity from a Fortune 100 U.S. insurance company such as Allstate. I’ll explain where the 3rd party assignment company comes in later. The seller is the sole beneficiary of the Fortune 100 guaranteed annuity. This gives the seller the peace of mind that the payments will be made each and every time no matter what the buyer does.

In addition, the seller does not claim constructive receipt on the income in the year of sale, which enables them to defer their capital gains taxes to future years.


So basically, the Ensured Installment Sale (Structured Sale) is treated as an installment sale by the IRS for tax purposes. The buyer comes into the transaction with cash or financing, so from their side the transaction looks like an all cash sale. The buyer gets full title at closing, unlike with traditional installment sales where the seller often keeps title until they are paid off.

Now that you are confused… here is the flow of the transaction to help clear it up.

  • Seller chooses to use a structured sale and consults with an annuity broker certified to perform structured sales (Settlement Professionals Inc.)
  • Seller and buyer enter into an installment sale agreement.
  • Buyer pays seller negotiated down payment.
  • Buyer assigns their payment obligation to 3rd party assignment company and writes a check for the balance owed. (This is necessary in order to prevent constructive receipt of the income for the seller. The seller cannot take possession of the cash before the annuity is purchased or it will be taxed immediately)
  • 3rd party assignment company (affiliated with Allstate Insurance) purchase the agreed upon annuity from Allstate.
  • Seller is the sole beneficiary of the annuity (which can be passed on to heirs if seller dies) and receives principal and interest payments monthly or yearly for their desired term.
  • Seller recognizes the gain at the time they receive it and are taxed accordingly, usually at a lower tax bracket than if they were to recognize the entire gain in the year of the sale.

All of the paperwork is done by the annuity broker (e.g. Settlement Professionals Inc.)

Read Part 2 of the Series

Settlement Professionals Inc. (SPI), a national company, was founded in 1987 and is based in West Linn, Oregon (a suburb of Portland). SPI’s founder, Jack Meligan, has been a top annuity specialist for over 19 years and is seen as one of the nations preeminent experts in the structured annuity field with many published articles in high profile publications. SPI’s main business is structured settlement planning for plaintiffs in injury cases around the U.S.; however, has began to focus on the Ensured Installment Sale (Structured Sale) since its development by Allstate Insurance in 2005.
SPI has teamed up with many of the nations top tax, financial, and real estate professionals to give sellers of appreciated assets a better solution for deferring capital gains taxes with less risk and greater benefits.
To contact SPI please call 1-888-666-5584, email: [email protected], visit: http://www.structuredsalespro.com or http://www.settlepro.com

About Author

Joshua Dorkin

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and Inc.com.


  1. I too am glad that you have found this information to be helpful! Josh and the Bigger Pockets team do the real estate investment community a great service with the excellent website and up to date information.

    The Structured Sale is getting increasingly popular and we expect to help more and more people use the Structured Sale in 2007.

    The Structured Sale can only be utilized with the help of a certified structured annuity specialist like Settlement Professionals Inc, but remember…it doesn’t cost the seller, buyer, agent, etc a dime ever! How great is that?

    If you want to explore using the Structured Sale further with your properties/business let us know, we are here to help.

    Trevor Mauch
    Settlement Professionals Inc.

  2. During the recession this type of sale became a lot more popular. Now that the wheel seems to be turning I wonder if it is still going to be as popular. I do find it strange that people choose this type of payment structure in a recession, especially because the risk of no payment is so much greater. I guess sellers and buyers are more desperate to sell during a recession and that probably makes this type of sale attractive. Great article.

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