Interest expense I PAID to a lender on a home I sold on land contract !!!

[lfsaicda]

For many years I have (as advised by the IRS) shown interest income on my tax return and interest expense on the still existing mortgage on a home sold on land contract as sort of "wrap" mortgage.

On the 2018 turbo tax for home and business how and where do I put this and the reduction on the 

balance of the loan was a capital gain NOW I CAN NOT FIND OUT HOW TO DO THIS?????

ANSWER BELOW NOT WHAT I NEED ! WHERE DO I DEDUCT THE INTEREST I PAID TO BANK?

The buyer paid me interest on the land contract BUT I paid the first mortgage holder interest !

I am not certain why the information did not transfer in to 2018 Home & Business, but you can get to the installment sale section by typing "installment sales" in the search box and clicking the Find button (see screenshot).

Top answer by: tagteam 

SuperUser

[tagteam]

If you merely want to know where you deduct the interest you paid on your mortgage to the bank, that would be under Mortgage Interest, Refinancing, and Insurance in the Deductions & Credits section.

Since you did "sort of a wrap" and are currently paying the mortgage to your lender, I can only presume you still hold title to the property (if the bank discovers this "arrangement" the due-on-sale clause will almost certainly be triggered and the balance will immediately become due). As a result, nothing has actually changed from your perspective; you still own the house and have sole liability for repayment of the note to your lender.

As a sidebar, the "buyer" actually cannot deduct interest payments (as mortgage interest) made to you since those payments are not secured debt. 

See https://www.irs.gov/publications/p936#en_US_2018_publink1000229896