How do we report land we sold at a significant loss and are doing owner financing. How do I report this? Is the interest payment reportable as income?

We purchased the land 3 years ago. Our cost basis is $77,908. We sold it this summer for $68,500 and are doing owner financing.

The contract is for 15 years. We got a statement from the mortgage company handling the payments for us, but not a formal tax reporting form.

How do I report the sale and the interest? I tried to enter as an installment contract, but TurboTax said it didn't qualify, to report it another way. Help

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1 Best answer

New Member

Jun 5, 2019 5:42:33 PM

Because you sold the property at a loss, the sale is not eligible for installment reporting. You'll need to enter the transaction in two ways.

First, go to Federal Taxes>Wages & Income>Investment Income >Stocks, Mutual Funds, Bonds Other. Proceed through the interview until you reach the question Choose the type of investment you sold, then select land. Report the sale and your loss of $9408.
Next, report the interest income you received. Go to Federal Taxes>Wages & Income>Interest and Dividends>Interest from Seller-Financed Loans

You'll need to report the interest on the loan each year.

New Member

Jun 5, 2019 5:42:33 PM

Because you sold the property at a loss, the sale is not eligible for installment reporting. You'll need to enter the transaction in two ways.

First, go to Federal Taxes>Wages & Income>Investment Income >Stocks, Mutual Funds, Bonds Other. Proceed through the interview until you reach the question Choose the type of investment you sold, then select land. Report the sale and your loss of $9408.
Next, report the interest income you received. Go to Federal Taxes>Wages & Income>Interest and Dividends>Interest from Seller-Financed Loans

You'll need to report the interest on the loan each year.

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How do we report land we sold at a significant loss and are doing owner financing. How do I report this? Is the interest payment reportable as income?