Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
doreyharman
New Member

We sold property on an owner finance agreement. Our 1099S shows the total sale price of the property, not the interest income on the payments. How do I report this?

 
4 Replies
JulieR
New Member

We sold property on an owner finance agreement. Our 1099S shows the total sale price of the property, not the interest income on the payments. How do I report this?

Form 1099-S only reports the date of closing and gross proceeds (sales price) it does not list details about an installment sale.  

You'll need to acquire the details of the payments you've received from the buyer.  When you sold the property, you should have received a "Loan Amortization Schedule" from the title company, showing the schedule of payments to be made by the buyer.  This schedule will break down the to principal and interest that apply to each payment.  You'll need that schedule to accurately report this installment sale on your return. If you were not provided a schedule of payments, you may find the following Mortgage Payment Calculator useful in calculating the information you need.  https://www.amortization-calc.com/mortgage-payment-calculator/

Once you have the information about the loan payments, you'll report this sale under the Income & Expenses section of your return under Less Common Income/Installment Sales. (see screenshot). Follow the program prompts to enter the details of this sale and report the principal and interest payments received.

[Edited 03.30.2019 | 6:25 PM pst]

JulieR
New Member

We sold property on an owner finance agreement. Our 1099S shows the total sale price of the property, not the interest income on the payments. How do I report this?

Please see my edited answer. If there something about my answer that did not address your issue, please comment.  I'd like to clarify.
echecs
New Member

We sold property on an owner finance agreement. Our 1099S shows the total sale price of the property, not the interest income on the payments. How do I report this?

I think I need a new 1099S.  One that reflects the down payment instead of the total sale price.
JulieR
New Member

We sold property on an owner finance agreement. Our 1099S shows the total sale price of the property, not the interest income on the payments. How do I report this?

Actually, the 1099-S is correct in reporting the Gross proceeds, which means the full sale price.  This does not mean, however, that you will immediately pay tax on the full gain.  Since this is an installment sale, you will only pay tax on the percentage of the gain attributable to the principle payments you receive. This percentage is called the "gross profit percentage" and is calculated in TurboTax when you report the sale as described in my answer.  I hope you now find my answer "helpful".  
Dynamic AdsDynamic Ads
Privacy Settings
v