Yes. Seller financed interest is taxable income to the recipient. You can complete Form 1096 which is a transmittal and Form 1099-INT (required when interest paid is greater than $10).
The interest is mortgage interest to the buyer/payer and interest income to the seller/recipient. A Form 1098 is not required to be issued unless it was part of a trade or business transaction.
To record the mortgage interest, enter it as mortgage interest expense. The owner can deduct the interest payment as mortgage interest if the property is in the name of the buyer and is security for the loan, should default occur.
- Use the Search box (upper right) > type 'mortgage interest > Click the Jump to... link
- You will enter the information requested
To record the interest income.
- Use the Search box (upper right) > type 'seller financed interest' > Click the Jump to... link
- You will enter the social security number (SSN) of the payer when there is not an EIN.
You can use the W-9 form for the buyer to fill out for your files.
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