Understanding Installment Payments for Farmland Sales: New IRS Regulations

On September 28, 2026, the IRS announced proposed regulations regarding installment payments for taxpayers selling or exchanging qualifying farmland. This update is particularly relevant for farmers and landowners in Hilo and across the Big Island.

Under the new regulations, taxpayers who sell or exchange qualifying farmland can elect to pay the tax on the gain in four equal annual installments. This option can provide significant cash flow benefits, allowing sellers to manage their tax liabilities more effectively while still receiving the proceeds from the sale.

To qualify, the farmland must be sold to a qualified farmer, and the seller must meet specific criteria outlined by the IRS. This regulation aims to ease the financial burden on farmers, particularly those transitioning their operations or retiring from farming.

Taxpayers considering this option should carefully evaluate their eligibility and the implications of electing to pay taxes in installments. Consulting with a tax professional can help clarify any uncertainties and ensure compliance with the new regulations.

For more detailed information, you can read the official announcement from the IRS here.

Official sources:

• IRS Newsroom