How do I report interest income I have earned from a loan?

[sfinegan]

We sold a parcel of land (no structure, just open land) in 2017.  We financed this sale ourselves, so We also hold the “Promissory Note”.

We sold this Land with the Terms of $47,000 @ 5%.APR.  The Buyer agreed to pay us $500 per month towards the Balance.  We have accepted 8 monthly payments of $500 in 2017, which has resulted in us earning $1530.88 in Interest income.

How do We report this additional income of $1530.88 using TurboTax?
Do We need to also report this same information to the Buyer?

[Carl]

I myself can't answer this one, but I do know that readers need to know if you have a legally binding loan agreement and if you are listed as lienholder on the land, with the buyer listed as the owner.

[sfinegan]

Yes, I hold the "Promissory Note" and I am listed as the lien holder.

[Carl]

Perfect! Now I need to bookmark Critter's answer. 🙂

[Critter · Accepted solution]

You have an installment agreement so you fill in a form 6252...

• Click on "Search" and type "Installment Sales" in the window and hit Enter
• Click on "Jump to Installment Sales"
• On the page "Any Other Property Sales" check the box for: "Sales of real estate, cars, or anything else for which you receive payments over two or more tax years (installment sales)" and click Continue
  
• If you are using Deluxe you will be prompted to upgrade to Premier
• On the Installment Sales page answer yes to"Do you want to report an installment sale?"
• Continue through the interview and record the details of your Installment Sale