You can deduct the interest if the loan is secured by your home and is properly recorded by the local government. You will need the name, address, and Social Security number of the person you made the mortgage payments to.
Did you pay $10,000 of interest, or $10,000 altogether. You can only deduct the portion of the payments that is interest, not the entire amount that you paid.
Here's how to enter mortgage interest on a seller-financed loan in TurboTax.
- In TurboTax Self-Employed or Home & Business click the Personal Tab. In other versions click the Federal Taxes tab.
- Click Deductions & Credits.
- Click "I'll choose what I work on" or "Jump to a full list."
- On the screen "Your 2016 Deductions & Credits," under "Your Home" click the Start button for "Mortgage Interest, Refinancing, and Insurance."
- The first screen asks for the lender's name. Enter the name of the person you made the mortgage payments to.
- The next screen says "Tell Us More About Your Loan" and has several checkboxes. Check the box that says "I did not receive a 1098."
- On the next screen, enter the amount of interest that you paid. Enter only the interest portion of your payments, not the full amount that you paid.
- The next screen asks for some additional information about your mortgage. Enter the requested information.
- The next screen asks if it's a seller-financed loan. Click Yes.
- On the next screen enter the seller's address and Social Security number.
