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meghang
New Member

I don't have a mortgage on my house, I have a promissory note. How do I deduct interest paid on a promissory note?

We bought a house from a family member using a promissory note. We pay interest along with our monthly payment to the family member. We own the house, though - the deed is in our name. How do I deduct this interest? What do I enter when I say whether I have a mortgage or not?
1 Reply
JohnR1
New Member

I don't have a mortgage on my house, I have a promissory note. How do I deduct interest paid on a promissory note?

You enter the promissory note information into TurboTax in the same manner as if you had a mortgage loan and did not receive a Form 1098 from the lender - please follow these steps:

  • In your return, click on Federal Taxes
  • Click on Deductions & Credits
  • Under "Your tax breaks", click on Edit/Add button for Mortgage Interest, Refinancing, and Insurance
  • On "Mortgage deduction summary" page, click on Add a lender button
  • Add lender name on the next page and click on Continue button
  • Select radio button for "The seller is financing this loan and I didn't receive a 1098" on ""Do any of these uncommon situations apply to your loan" page, and click on Continue button
  • On "Let's get some info about [lender's name] now" page, enter the available information you have about the lender, and click on Continue button
  • On "Let's get the rest of your mortgage info", enter the interest you paid on the promissory note, the outstanding  principal on the promissory note, and the note origination date, if known
  • Click on Continue button when finished, and answer remaining questions regarding this loan

 

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