Dictionary of Real Estate Terms: contract price (tax)
contract price (tax)
in an installment sale, for tax purposes, generally the selling price less existing mortgages assumed by the buyer.
Example: Abel sells land for $100,000 subject to an existing $60,000 first mortgage. Abel receives $5,000 cash in the year of sale and a $35,000 second mortgage from the buyer. The contract price is $40,000. Note, if Abel's adjusted tax basis in the land exceeds the first mortgage, such excess is a payment in the year and reduces the contract price.
