The Met Tower Life Advantage
The Structured Installment Sale is provided by Metropolitan Tower Life Insurance Company, (Met Tower Life), an insurance industry leader and a leader in the structured settlement market. Met Tower Life holds an A+ rating from A.M. Best, an Aa3 rating with Moody’s, an AA- with Fitch and an AA- with Standard & Poor’s. The promise of financial security is only as solid as the company making the guarantee. When you select our annuity, you are choosing a leader who will partner with you every step of the way and can provide you with a steady, dependable income stream — both now and in the future.
A Case Example:
In 2021, Marge sold an investment property that she had owned for the last 20 years. The sale price was $1,500,000; the adjusted basis of the property was $900,000, the property wasn’t subject to a mortgage and the selling expenses associated with this transaction were $50,000.
During the sale, Marge consulted with her legal and tax advisors who helped her determine that a Structured Installment Sale would be beneficial. This financial tool would provide periodic payments to help supplement her retirement and would also defer capital gain taxes on the property beyond the year of the sale. Per the Purchase and Sale agreement, the $1,500,000 purchase would be payable as follows: upfront cash of $500,000 in this year with the remaining $1,000,000 payable in 10 equal amounts beginning next year.
If Marge had received the proceeds in full at the time of the sale, she would have to pay just over $68,000 in federal capital gain taxes. A 3.8% net investment income tax (NIIT) would also apply to a portion of the gain resulting in an additional $11,400 of taxes. Total federal taxes would be about $79,400 ($68,000 + $11,400).
But, if she utilizes the Structured Installment Sale she will pay approximately $11,600 of federal capital gains taxes in the year of the sale due to the 15% and 0% capital gains rates, and $0 each year for the next 10 years due to the 0% capital gains rate* Additionally, none of the proceeds would be subject to the 3.8% NIIT. This results in a tax savings of about $67,800. Under the tax rules applicable to installment sales, a portion of each payment will comprise interest and thus, will be taxed as ordinary income.
Ultimately, by using a Structured Installment Sale, Marge’s capital gains and NIIT tax bill will be reduced thus preserving more of the sales proceeds and she will have peace of mind of a guaranteed1 income stream.