Vendor Take-Back Note & Capital Gains Reserve Calculator

Financing part of your own sale price for the buyer isn't just a negotiating tool, it spreads your tax bill across the years you're actually collecting the cash.

Reading This Tool

How To Use This Calculator

Enter the sale price, cost base, cash received at closing, and how many years the remaining note is paid over.

The capital gains reserve generally lets you recognize gain in proportion to what you've actually collected, subject to a floor requiring at least 20% of the gain recognized every year, fully taxed within five years even if the note runs longer.

Your Inputs

Total Sale Price $2,000,000

Adjusted Cost Base $300,000

Cash Received At Closing $800,000

Years The VTB Note Is Repaid Over 5 yrs

Assumes equal annual note payments after closing. The five-year reserve maximum shown here is the standard rule; qualifying farm, fishing, or genuine intergenerational business transfers can extend this reserve to ten years instead.

Gain Recognition Schedule

Gain Recognized At Closing

Total Gain On This Sale

Gain Deferred Beyond Closing

Gain Recognized Each Year

A capital gains reserve must be formally claimed each year on Schedule 6 of the personal or corporate return, it isn't automatic. If the buyer defaults on the note, separate rules govern how that loss is treated, not modeled here.

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