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

[meghang]

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?

[JohnR1]

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