US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 483

Interest on certain deferred payments

(a)

Amount constituting interest

For purposes of this title, in the case of any payment—
(1)
under any contract for the sale or exchange of any property, and
(2)
to which this section applies,
there shall be treated as interest that portion of the total unstated interest under such contract which, as determined in a manner consistent with the method of computing interest under section 1272(a), is properly allocable to such payment.
(b)

Total unstated interest

For purposes of this section, the term “total unstated interest” means, with respect to a contract for the sale or exchange of property, an amount equal to the excess of—
(1)
the sum of the payments to which this section applies which are due under the contract, over
(2)
the sum of the present values of such payments and the present values of any interest payments due under the contract.
For purposes of the preceding sentence, the present value of a payment shall be determined under the rules of section 1274(b)(2) using a discount rate equal to the applicable Federal rate determined under section 1274(d).
(c)

Payments to which subsection (a) applies

(1)

In general

Except as provided in subsection (d), this section shall apply to any payment on account of the sale or exchange of property which constitutes part or all of the sales price and which is due more than 6 months after the date of such sale or exchange under a contract—
(A)
under which some or all of the payments are due more than 1 year after the date of such sale or exchange, and
(B)
under which there is total unstated interest.
(2)

Treatment of other debt instruments

For purposes of this section, a debt instrument of the purchaser which is given in consideration for the sale or exchange of property shall not be treated as a payment, and any payment due under such debt instrument shall be treated as due under the contract for the sale or exchange.

(3)

Debt instrument defined

For purposes of this subsection, the term “debt instrument” has the meaning given such term by section 1275(a)(1).

(d)

Exceptions and limitations

(1)

Coordination with original issue discount rules

This section shall not apply to any debt instrument for which an issue price is determined under section 1273(b) (other than paragraph (4) thereof) or section 1274.

(2)

Sales prices of $3,000 or less

This section shall not apply to any payment on account of the sale or exchange of property if it can be determined at the time of such sale or exchange that the sales price cannot exceed $3,000.

(3)

Carrying charges

In the case of the purchaser, the tax treatment of amounts paid on account of the sale or exchange of property shall be made without regard to this section if any such amounts are treated under section 163(b) as if they included interest.

(4)

Certain sales of patents

In the case of any transfer described in section 1235(a) (relating to sale or exchange of patents), this section shall not apply to any amount contingent on the productivity, use, or disposition of the property transferred.

(e)

Maximum rate of interest on certain transfers of land between related parties

(1)

In general

In the case of any qualified sale, the discount rate used in determining the total unstated interest rate under subsection (b) shall not exceed 6 percent, compounded semiannually.

(2)

Qualified sale

For purposes of this subsection, the term “qualified sale” means any sale or exchange of land by an individual to a member of such individual’s family (within the meaning of section 267(c)(4)).

(3)

$500,000 limitation

Paragraph (1) shall not apply to any qualified sale between individuals made during any calendar year to the extent that the sales price for such sale (when added to the aggregate sales price for prior qualified sales between such individuals during the calendar year) exceeds $500,000.

(4)

Nonresident alien individuals

Paragraph (1) shall not apply to any sale or exchange if any party to such sale or exchange is a nonresident alien individual.

(f)

Regulations

The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section including regulations providing for the application of this section in the case of—
(1)
any contract for the sale or exchange of property under which the liability for, or the amount or due date of, a payment cannot be determined at the time of the sale or exchange, or
(2)
any change in the liability for, or the amount or due date of, any payment (including interest) under a contract for the sale or exchange of property.
(g)

Cross references

(1)
For treatment of assumptions, see section l274(c)(4).
(2)
For special rules for certain transactions where stated principal amount does not exceed $2,800,000, see section 1274A.
(3)
For special rules in case of the borrower under certain loans for personal use, see section 1275(b).

Pub. L. 88–272, title II, § 224(a)78 Stat. 77Pub. L. 94–455, title XIX90 Stat. 1792Pub. L. 97–34, title I, § 126(a)95 Stat. 202Pub. L. 97–448, title I, § 101(g)96 Stat. 2367Pub. L. 98–369, div. A, title I, § 41(b)98 Stat. 553Pub. L. 99–121, title I99 Stat. 505Pub. L. 99–514, title XVIII, § 1803(a)(14)(B)100 Stat. 2797(Added , , ; amended , §§ 1901(b)(3)(B), 1906(b)(13)(A), , , 1834; , , ; , , ; , , ; , §§ 101(a)(2), 102(c)(1)–(3), , , 508; , , .)

Editorial Notes

Amendments

Pub. L. 99–5141986—Subsec. (d)(3). substituted “for which an issue price is determined under section 1273(b) (other than paragraph (4) thereof) or section 1274” for “to which section 1272 applies”.

Pub. L. 99–121, § 101(a)(2)(A)1985—Subsec. (b). , struck out “120 percent of” after “discount rate equal to” in closing provisions.

Pub. L. 99–121, § 101(a)(2)(B)Subsec. (c)(1)(B). , amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “under which, using a discount rate equal to 110 percent of the applicable Federal rate determined under section 1274(d), there is total unstated interest.”

Pub. L. 99–121, § 102(c)(1)Subsec. (e). , (2), redesignated subsec. (f) as (e), and as so redesignated substituted “6 percent” for “7 percent” in par. (1). Former subsec. (e), which related to the interest rates in the case of the sales of principal residences or farm lands, was struck out.

Pub. L. 99–121, § 102(c)(1)Subsec. (f). , redesignated subsec. (g) as (f). Former subsec. (f) redesignated (e).

Pub. L. 99–121, § 102(c)(1)Subsecs. (g), (h). , (3), redesignated subsec. (h) as (g) and amended it generally, designating existing undesignated cross reference as par. (3), and adding pars. (1) and (2). Former subsec. (g) redesignated (f).

Pub. L. 98–3691984—Subsec. (a). amended subsec. (a) generally, substituting “For purposes of this title, in the case of any payment (1) under any contract for the sale or exchange of any property, and (2) to which this section applies, there shall be treated as interest that portion of the total unstated interest under such contract which, as determined in a manner consistent with the method of computing interest under section 1272(a), is properly allocable to such payment” for “For purposes of this title, in the case of any contract for the sale or exchange of property there shall be treated as interest that part of a payment to which this section applies which bears the same ratio to the amount of such payment as the total unstated interest under such contract bears to the total of the payments to which this section applies which are due under such contract”.

Pub. L. 98–369Subsec. (b). amended subsec. (b) generally, substituting provisions directing that the present value of a payment be determined under the rules of section 1274(b)(2) using a discount rate equal to 120 percent of the applicable Federal rate determined under section 1274(d) for provisions which had directed that the present value of a payment be determined, as of the date of the sale or exchange, by discounting such payment at the rate, and in the manner, provided in regulations prescribed by the Secretary and that such regulations provide for discounting on the basis of 6-month brackets and provide that the present value of any interest payment due not more than 6 months after the date of the sale or exchange was to have been an amount equal to 100 percent of such payment.

Pub. L. 98–369Subsec. (c). substituted “subsection (a) applies” for “section applies” in heading.

Pub. L. 98–369Subsec. (c)(1). substituted “under which, using a discount rate equal to 110 percent of the applicable Federal rate determined under section 1274(d), there is total unstated interest” for “under which, using a rate provided by regulations prescribed by the Secretary for purposes of this subparagraph, there is total unstated interest”, in subpar. (B), and struck out provision formerly set out following subpar. (B) which had directed that any rate prescribed for determining whether there was total unstated interest for purposes of subpar. (B) be at least one percentage point lower than the rate prescribed for purposes of subsec. (b)(2).

Pub. L. 98–369Subsec. (c)(2). substituted “Treatment of other debt instruments” for “Treatment of other evidence of indebtedness” in heading and, in text, substituted “a debt instrument of the purchaser which is given in consideration for the sale or exchange of property shall not be treated as a payment, and any payment due under such debt instrument” for “an evidence of indebtedness of the purchaser given in consideration for the sale or exchange of property shall not be considered a payment, and any payment due under such evidence of indebtedness”.

Pub. L. 98–369Subsec. (c)(3). added par. (3).

Pub. L. 98–369Subsec. (d). amended subsec. (d) generally, substituting provisions relating to exceptions and limitations for provisions which related to payments indefinite as to time, liability, or amount.

Pub. L. 98–369Subsec. (e). amended subsec. (e) generally, substituting provisions relating to interest rates in case of sale of principal residence or farm land for provision relating to changes in terms of contract.

Pub. L. 98–369Subsec. (f). amended subsec. (f) generally, substituting provisions relating to maximum rate of interest on certain transfers of land between related parties for provisions which related to exceptions and limitations now covered in subsec. (d) of this section.

Pub. L. 98–369Subsec. (g). amended subsec. (g) generally, substituting provisions which related to calling for the promulgation of regulations by the Secretary for provisions which related to the maximum rate of interest on certain transfers of land between related parties now covered in subsec. (f) of this section.

Pub. L. 98–369Subsec. (h). added subsec. (h).

Pub. L. 97–4481983—Subsec. (g)(4). substituted “Paragraph (1)” for “This section”.

Pub. L. 97–341981—Subsec. (g). added subsec. (g).

Pub. L. 94–455, § 1906(b)(13)(A)1976—Subsecs. (b), (c)(1)(B), (e). , struck out “or his delegate” after “Secretary”.

Pub. L. 94–455, § 1901(b)(3)(B)Subsec. (f)(3). , substituted “all of the gain, if any, on such” for “no part of any gain on such” and “ordinary income” for gain from the sale or exchange of property other than a capital asset”.

Statutory Notes and Related Subsidiaries

Effective Date of 1986 Amendment

Pub. L. 99–514Pub. L. 98–369, div. Asection 1881 of Pub. L. 99–514section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .

Effective Date of 1985 Amendment

Pub. L. 99–121section 105(a)(1) of Pub. L. 99–121section 1274 of this titleAmendment by applicable to sales and exchanges after , in taxable years ending after such date, see , set out as a note under .

Effective Date of 1984 Amendment

Pub. L. 98–369section 44 of Pub. L. 98–369section 1271 of this titleAmendment by applicable to taxable years ending after , and applicable to sales or exchanges after , but not applicable to any sale or exchange pursuant to a written contract which was binding on , and at all times thereafter before the sale or exchange, see , set out as an Effective Date note under .

Effective Date of 1983 Amendment

Pub. L. 97–448Pub. L. 97–34section 109 of Pub. L. 97–448section 1 of this titleAmendment by effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, , to which such amendment relates, see , set out as a note under .

Effective Date of 1981 Amendment

Pub. L. 97–34, title I, § 126(b)95 Stat. 202

“The amendment made by subsection (a) [amending this section] shall apply to payments made after , pursuant to sales or exchanges after such date.”
, , , provided that:

Effective Date of 1976 Amendment

section 1901(b)(3)(B) of Pub. L. 94–455section 1901(d) of Pub. L. 94–455section 2 of this titleAmendment by effective for taxable years beginning after , see , set out as a note under .

Effective Date

section 224(d) of Pub. L. 88–272section 163 of this titleSection applicable to payments made after , on account of sales or exchanges of property after , other than a sale or exchange pursuant to written contract, including an irrevocable written option, entered into before , see , set out as an Effective Date of 1964 Amendment note under .

Plan Amendments Not Required Until January 1, 1989

Pub. L. 99–514section 1140 of Pub. L. 99–514section 401 of this titleFor provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see , as amended, set out as a note under .

Treatment of Transfers of Land Between Related Parties

Pub. L. 99–514, title XVIII, § 1803(a)(9)100 Stat. 2794

Public Law 99–121“In the case of any sale or exchange before , to which section 483(f) of the Internal Revenue Code of 1954 [now 1986] (as in effect on the day before the date of the enactment of []) applies, such section shall be treated as providing that the discount rate to be used for purposes of section 483(c)(1) of such Code shall be 6 percent, compounded semiannually.”
, , , provided that:

Transitional Rule for Purposes of Imputed Interest Rules

Pub. L. 98–369section 1271 of this titleProvisions, respecting treatment of debt instruments received in exchange for property, relating to special rules for sales after , and before , general rule for assumptions of loans, exception for assumptions of loans made on or before , and exception for assumptions of loans with respect to certain property, see section 44(b)(4)–(7) of , as amended, set out as an Effective Date note under .