Sold home w/ installment. Price originally paid & sold for was $5,000 more. Do list as installment or not since not enough gain?

[modfy08]

The program says I don't have to list home on taxes cause it was not enough of a gain but then if I use the form they said for the installment, they want me to pay taxes on the interest. If I total the interest for the whole installment plus the $5,000 we made one the house, it would only be a gain of 8,507.12 total

[IsabellaG · Accepted solution]

You can exclude the gain on the sale of your residence if you qualify even if you sold it in an installment sale, but the interest that you receive each year will be taxable no matter what. That's not part of the gain on the sale.