Yes, you need to report the sale and the interest you received. This type of transaction is known as an Installment Sale. How you report this depends on when the sale closed and when you expect to receive full payment.
If you sold this property this year and expect to receive payments for more than one year, follow these instructions:
To enter an installment sale (Form 6252), use the Find/Search box in the TurboTax header and type in "Sale of Business Property." Hit Enter, then click on "jump to sale of business property." You will see a screen titled "Any other property sales." Check the box titled "sales of real estate, cars or anything else for which you receive payments over two or more years." Click Continue & the interview will guide you from there.
If, however, the sale contract was executed and fulfilled in the same year, you would report this as a normal real estate sale. (For tax purposes, an "installment sale" is a sale of property where one or more payments on the sale is to be received after the year of sale.)
In this case, search on "investment sale," jump to the start of the section, answer "yes" you have a sale to report, and follow the interview to report the sale.
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