Reporting income as a private mortgage lender?

[mcellucci334]

How do I report principal income I received as a private mortgage lender? I used to hold a private mortgage as part of a trust that I inherited. Every year I always get a k1 form from the trust for the income I received on the interest. I have already entered that form for 2023.  But in October 2023 the current owner of the property sold it and I was paid off in a lump sum of just the remaining principal of his mortgage. How do I report that?

[ThomasM125]

I think you mean that you held a mortgage and reported the interest income you received from it on your tax in return. You also received a payment of the mortgage balance on which there was no interest due you. If so, you don't need to report the principal payment that you received as it is not taxable to you.