6252 installment sale income other than principal

[caisson1]

I know principal income goes to line 26 and interest to Sch. B, but where do the other portions of payments? I mean late fees, taxes and insurance. 

[ColeenD3 · Accepted solution]

If these were not sales expenses but were actually incurred while the property was being rented, enter them on Schedule E. Please see this LINK for instructions on how to enter expenses on Schedule E.

Line 5 of Form 6252 includes the following:

Line 5

Enter the total of any money, the face amount of the installment obligation, and the FMV of other property or services that you received or will receive in exchange for the property sold. Include on line 5 any existing mortgage or other debt the buyer assumed or took the property subject to. Don’t include stated interest, unstated interest, any amount recomputed or recharacterized as interest, or original issue discount.

Line 8 refers to costs at purchase:

Line 8

Enter the original cost and other expenses you incurred in buying the property. Add the cost of improvements, etc., and subtract any casualty losses and any of the following credits previously allowed with respect to the property.

An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. You can read more about it here. Here’s how to report one in TurboTax:

1. Open your return in TurboTax.
2. In the search box, search for installment sales and select Jump to installment sales.
3. Check the box next to Sales of real estate, cars, or anything else for which you receive payments over two or more tax years (installment sales). Select Continue.
4. Answer Yes to Do you want to report an installment sale?
5. Follow the instructions to enter your sale details.

Form 6252

[caisson1]

Thank you for your response, but I'm sorry, that doesn't answer my question.  I do not use Schedule E as that's for rentals.  This is an installment sale.  Form 6252, Line 5 is the selling price I sold the property for and line 8 is my cost and other expenses of the sale.

My question is only about line 21, form 6252. My installment sale buyer pays me a payment that consists of PITI (Principal, Interest, Taxes, Insurance) and late fees each month. It is clear that all the principal I received for a given year goes on line 21. It is also clear that interest is not included on line 21. So of my payments received, that leaves taxes, insurance, and late fees.

Question:

should these amounts be included on line 21?

Incidentally, I pay the taxes and insurance annually for the buyers on the installment sale. Almost like an escrow account but I do not have it set up that way.

[caisson1]

I'm sorry, my original post says line 26 and that's a typo.  I meant line 21.

[Critter-3 · Accepted solution]

If you are collecting taxes & insurance like an escrow account it is neither income nor an expense on your tax return ... there should be a separate fiduciary bank  account used for these pay ins and outs.   The new owner can deduct the taxes they paid  and the insurance if they use the building for business. 

And late fees are added to the interest  just like a mortgage company does.