How do I report income from interest on a mortgage I am holding?

[MargaretL · Accepted solution]

You should report the interest on the mortgage. The data entry in TurboTax depends on the actual nature of the loan.

If this is a personal loan that you gave to an individual, please enter the interest received just as if you have received Form 1099-INT. Enter your individual’s name as a Payer's name and the amount of interest received in box 1.

1. Federal Taxes
2. Wages & Income
3. Interest & Dividends
4. Interest on 1099-INT

If you have interest from a Seller-financed loan (You have a seller-financed mortgage if you sell your home and you accept a trust deed or other repayment promise as part of the payment. You are the seller if you financed part or all of the buyer's purchase price when you sold the home.) - the data entry is located under:

1. Federal Taxes
2. Wages & Income
3. Interest & Dividends
4. Interest from Seller Financed Loans

[DHCarr]

It is somewhat confusing (for me). I hold a mortgage on real property and is not a personal loan. would the interest still be entered on line 2a? 

Thanks

[Vanessa A]

No, it would be on 2b as it is taxable interest income. The mortgage interest will still be entered under investment income as regular interest income. 

To enter your interest from a seller owned finance you will click the following:

• Federal 
• Income
• Scroll down to Interest and Dividends then click Show More
• Start next to Interest from Seller-Financed Loans

[peterdubro]

OK - similar situation.

Since the property was previously a rental, the portion of capital gains from the principal payments (principal payment minus portion of the basis for that payment) need to be reported - how / where do I do this?

Thanks!

[ThomasM125]

You need to report income received over more that one year as installment sale income in TurboTax. To find that section, use the SEARCH icon on the top right of your screen and search for Installment sales and you will see a Jump to installment sales option that will take you to the correct section in TurboTax. Once there, choose the Sales of business or rental proprty that you haven't already reported option. Answer the questions in that section to report you installment sale income in TurboTax.

[DGold]

I am trying to determine which TurboTax product I need so I can report income from principal and interest on a seller financed mortgage on a rental property I sold 2 years ago. Will basic TurboTax be adequate?

[DaveF1006]

Yes. You may report this in your Turbo Tax Basic program without being asked to upgrade.

@DGold