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Interest Income Received as a Single Member LLC Functioning as a Private Mortgage Lender

finance11 — Sun, 09 Feb 2025 11:45:11 GMT

Hi-

I lend money to individuals (and LLCs) through my single-member LLC for private mortgages. This is the entity's primary business purpose. How do I report? When I enter as 'Other Income', it subjects me to SE tax, which is not applicable.

Re: Interest Income Received as a Single Member LLC Functioning as a Private Mortgage Lender

MinhT1 — Sun, 09 Feb 2025 13:19:19 GMT

Your single-member LLC is a disregarded entity for tax purposes. Its income and expenses are reported on your personal tax return.

You report the interest earned as interest income, as if you had received a form1099-INT from a bank. And you won't be subject to self-employment tax.

Re: Interest Income Received as a Single Member LLC Functioning as a Private Mortgage Lender

finance11 — Mon, 10 Feb 2025 11:33:50 GMT

Thank you.

However, if I were to report interest income under my 'personal' side, I would lose the QBI credit, for which the activity is qualified.

Re: Interest Income Received as a Single Member LLC Functioning as a Private Mortgage Lender

PatriciaV — Mon, 10 Feb 2025 14:20:40 GMT

Section 199A Qualified Business Income Deduction is available only to a trade or business, not an individual. If you believe your activity is eligible for QBI, then you must report this as a self-employed business (subject to SE tax).

Additional information: What is the Qualified Business Income (QBI) deduction?