This would have been considered an installment sale at the time it began in 1997, so some clarification as to whether this was reported at that time might be helpful. If I assume you never reported the sale due to a misunderstanding of the requirements, then you would report the sale now if there is a gain. If there is a loss on the sale then a personal loss is not deductible. You should keep all of the records.
If you did receive a Form 1099-S reporting the gross proceeds of the sale, then you should determine your cost in the home (includes original purchase price, capital improvements (something that increases the value but not such things as painting or repairs), and the cost of purchase and sale if applicable. Indicate it was a personal sale when TurboTax asks you.
If there was no interest stated in the contract when you originally sold the property on installment, then a portion of your payments would be considered interest income and not principal payments.
Per the IRS: You generally report interest on an installment sale as ordinary income in the same manner as any other interest income. If the installment sales contract doesn't provide for adequate stated interest, part of the stated principal may be recharacterized as unstated interest or original issue discount for tax purposes, even if you have a loss. You must use the applicable federal rate (AFR) to figure the amount of stated principal recharacterized as unstated interest or original issue discount. The AFRs are published monthly in the Index of Applicable Federal Rates (AFR) Rulings.
- For more information on installment sales you can use the links below.
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