Imputed Interest

[Shrex22]

I sold a rental property to the person who had been renting it, since I purchased It. I sold the property to her and carried the mortgae at 0% interest. Needed to do it this way in order to charge fair value for the property, and make the payments work for what she could afford. The property had appreciated significantly. I fully understood the implications of the imputed interest I will have to pay. My question is, where on the tax form do I report it. Under installment sales, do I report is as interest received from the buyer, even though the buyer did not actually pay it? Or, is it reported elsewhere on the form? Thank you

[RobertG]

Yes, report it as part of the installment sale as interest received from the buyer.

When you report income from an installment sale you report the interest separately from the principal, because the interest is ordinary income, and the principal is either capital gain or return of your basis.

Topic No. 705 Installment Sales

[AuzzeeD]

If I report the interest on an installment sale on Form 6252 and then also include the interest on Schedule B., aren't I reporting the interest twice?

My taxes owed go up each time I report it.

[Critter]

Only report the interest in the 6252 interview section ... it will carry to the Sch B automatically ... do NOT ever enter something twice.