How do I report interest income I have earned from a loan?

sfinegan · ‎June 4, 2019

We sold a parcel of land (no structure, just open land) in 2017. We financed this sale ourselves, so We also hold the “Promissory Note”.

We sold this Land with the Terms of $47,000 @ 5%.APR. The Buyer agreed to pay us $500 per month towards the Balance. We have accepted 8 monthly payments of $500 in 2017, which has resulted in us earning $1530.88 in Interest income.

How do We report this additional income of $1530.88 using TurboTax?
Do We need to also report this same information to the Buyer?

Carl · ‎June 4, 2019

I myself can't answer this one, but I do know that readers need to know if you have a legally binding loan agreement and if you are listed as lienholder on the land, with the buyer listed as the owner.

sfinegan · ‎June 4, 2019

Yes, I hold the "Promissory Note" and I am listed as the lien holder.

Carl · ‎June 4, 2019

Perfect! Now I need to bookmark Critter's answer. 🙂

Critter · ‎June 4, 2019

You have an installment agreement so you fill in a form 6252...

Click on "Search" and type "Installment Sales" in the window and hit Enter
Click on "Jump to Installment Sales"
On the page "Any Other Property Sales" check the box for: "Sales of real estate, cars, or anything else for which you receive payments over two or more tax years (installment sales)" and click Continue
If you are using Deluxe you will be prompted to upgrade to Premier
On the Installment Sales page answer yes to"Do you want to report an installment sale?"
Continue through the interview and record the details of your Installment Sale

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How do I report interest income I have earned from a loan?

Get your taxes done using TurboTax

Get your taxes done using TurboTax

Get your taxes done using TurboTax

Get your taxes done using TurboTax