If the property owner has repaid the lien, minus your premium, you would enter this as an investment sale, with a category of other. Holding period would be the length of time you held the lien. The interest would be claimed as interest income under that section of the program. You can just say it was reported on a 1099-INT, it doesn't matter. The interest u pay tax on, whether when the lien is redeemed or you receive it on an annual basis, is added to the cost basis of your lien purchase. If the premium is not repaid, you could claim it as a selling cost, since it's included in your cost basis.
