seller financed mortgage note

ronit1983 · ‎February 21, 2026

I inherited a mortgage note from a property my father sold as seller financed. I receive monthly payments from the buyer. Do i only report interest income or also capital gains (irs 6252)?

MaryK4

You must report both the interest income (as ordinary income) and the taxable portion of the principal (as capital gains) on your tax return. Since you inherited an installment note, you generally step into your father's shoes, reporting payments using Form 6252 to calculate the taxable gain portion of each payment.

See How do I report an installment sale in TurboTax?

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