It depends. An installment sale gain is subject to net investment income tax, however see details below.
- See the Form 8960 Instructions for net investment income tax (NIIT) and posted below shows what is considered as income for this purpose.
- Additionally, net investment income includes net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in a trade or business that’s not (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities.
However, gain or loss from the sale of property held in a trade or business in which the taxpayer materially participates is not NIIT. Examples of gain included is from the sale of investment real estate and gain from sale of residence in excess of the applicable exclusion. Gain includes depreciation recapture.
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