topic Is seller financed interest on personal property sold at a loss deductable in Deductions & credits

Is seller financed interest on personal property sold at a loss deductable

albicknell — Thu, 06 Jun 2019 14:57:02 GMT

I sold some vacant land that we owned for 9 years on which we intended to build a house. I sold the property for a loss and provided owner financing for the buyer. Do I still have to claim the interest as income (I received a 1099-INT from the payment servicing company) even though we sold at a substantial loss?

Do I still have to claim the interest as income? YES

SweetieJean — Thu, 06 Jun 2019 14:57:03 GMT

Do I still have to claim the interest as income?
YES

You may have sold for a loss, but you're earning interest...

Lisa995 — Thu, 06 Jun 2019 14:57:05 GMT

You may have sold for a loss, but you're earning interest on loan, that needs to be reported as income.

If you sold investment property at a loss, then you may h...

Opus 17 — Thu, 06 Jun 2019 14:57:06 GMT

If you sold investment property at a loss, then you may have had a long-term capital loss, which would be reported on schedule D. Depending on the amount of the loss and any other schedule the capital gains or capital losses, you may have deducted that loss in the year you sold the property or you may have a carryover deduction for future years. If you did not report a capital loss for the year that you sold the property you should go back and review your tax returns for that year.

Separately, the interest on the seller financed loan is taxable, no matter how much the loan is for and no matter what the selling price of the property was. That interest is simply taxable income.