Selling rental property at a loss using the installment 6252

[Kevin3]

Sold a rental property in 2015 at a loss using a installment plan (P/I) with the tenant. The system would not allow me to create a 6252 form when it converted from the rental.

1. Where do I show the interest that I made in 2016 ? Which form as I will be getting payment for the next 29 years.

2. I assume that I still need to send out a 1098 to the client showing P/I for their taxes.

[ToddL]

To begin with, if your sale results in a loss, you cannot use the installment method. If the loss is on an installment sale of business or investment property, you can deduct it only in the tax year of sale. That is why the program did not generate a Form 6252. 

(From the Instructions for Form 6252: Don’t file Form 6252 for sales that don’t result in a gain, even if you will receive a payment in a tax year after the year of sale. Instead, report the entire sale on Form 4797, Sales of Business Property, Form 8949, Sales and Other Dispositions of Capital Assets, or the Schedule D for your tax return, whichever applies).

 You will report the interest income from this sale in the Interest from Seller-Financed Loan interview under Wages & Income, Interest and Dividends tabs. This particular interview will also request all the necessary information needed about the buyer/payer. You don't need to send the buyer/payer a Form 1098-INT.