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albicknell
New Member

Is seller financed interest on personal property sold at a loss deductable

I sold some vacant land that we owned for 9 years on which we intended to build a house. I sold the property for a loss and provided owner financing for the buyer. Do I still have to claim the interest  as income (I received a 1099-INT from the payment servicing company) even though we sold at a substantial loss? 

1 Best answer

Accepted Solutions
Opus 17
Level 15

Is seller financed interest on personal property sold at a loss deductable

 If you sold investment property at a loss, then you may have had a long-term capital loss, which would be reported on schedule D. Depending on the amount of the loss and any other schedule the capital gains or capital losses, you may have deducted that loss in the year you sold the property or you may have a carryover deduction for future years.  If you did not report a capital loss for the year that you sold the property you should go back and review your tax returns for that year.


Separately, the interest on the seller financed loan is taxable, no matter how much the loan is for and no matter what the selling price of the property was. That interest is simply taxable income.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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3 Replies
SweetieJean
Level 15

Is seller financed interest on personal property sold at a loss deductable

Do I still have to claim the interest  as income?
YES
Lisa995
Level 12

Is seller financed interest on personal property sold at a loss deductable

You may have sold for a loss, but you're earning interest on loan, that needs to be reported as income.
♪♫•*¨*•.¸¸♥Lisa♥ ¸¸.•*¨*•♫♪
Opus 17
Level 15

Is seller financed interest on personal property sold at a loss deductable

 If you sold investment property at a loss, then you may have had a long-term capital loss, which would be reported on schedule D. Depending on the amount of the loss and any other schedule the capital gains or capital losses, you may have deducted that loss in the year you sold the property or you may have a carryover deduction for future years.  If you did not report a capital loss for the year that you sold the property you should go back and review your tax returns for that year.


Separately, the interest on the seller financed loan is taxable, no matter how much the loan is for and no matter what the selling price of the property was. That interest is simply taxable income.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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