Will Refinancing an Installment Sale Obligation Trigger Recognition of Gain?

Abstract:     
With the recent decrease in interest rates, many real estate owners are taking the opportunity to improve their financial position by refinancing existing mortgages at the new lower rates. This most recent movement to restructure debt raises an interesting tax question: Will the refinancing of an existing installment sale debt instrument at a lower interest rate, either by changing the terms of the original instrument or by substituting a new debt instrument in place of the original, trigger immediate recognition of the balance of the previously deferred gain for income tax purposes?

Number of Pages in PDF File: 9

Keywords: installment obligations, refinancing debt, tax policy, gain recognition on debt structuring

JEL Classification: K34, K24, K25, Z10, D10, D11, D61

Accepted Paper Series