It's still an installment sale even if the title is transferred, I have title to my house. There is a lien on the title that shows I owe money to my mortgage bank, but the title is still in my name.
You will need to create an amortization table that shows how much of each monthly payment is interest and how much is principle. The interest is taxable income to you but the principal is not. There are web sites that can do this for you. You must also charge at least the IRS minimum interest rate. If you charge less than the IRS minimum interest rate, you must report taxable income equal to the interest you would have received if you charged the minimum rate. The rates are listed here, you want the long-term AFR under Table 1. For example, if the loan was made in September 2022, the long term rate is 3.1%. It's variable and has gone up a lot recently, so find the month in which he bought the home and make sure you are charging at least the minimum that applied to that month.
https://www.irs.gov/applicable-federal-rates
Your son is not allowed to deduct the interest on his tax return unless you take out a mortgage lien on the property and register it with the county clerk's office. This secures the loan and gives you the right to foreclose if he stops making payments. It also prevents him from going to a bank and borrowing more money against the home by hiding the loan he owes you. If the loan is not secured by a lien, it doesn't count as a tax deductible mortgage on his tax return. If you want to secure the loan with a mortgage lien, an attorney would be recommended. There will also be some fees to record the deed and mortgage at the county clerk's office.
