sold a house with a contract for deed - interest received and paid accounting

[Drindin]

I sold my house with a contract for deed. I pay interest to the mortgage company under the provision of original mortgage. I also receive interest from the house buyer under the provisions of the contract for deed. Where does interest received from the buyer go as income and how to deduct the interest paid to the mortgage company.

[Anonymous_ · Accepted solution]

Your scenario sounds like a wrap-around (assuming the lender has assented) which TurboTax does not handle well.

The transaction would typically be entered as an installment sale and the home sale exclusion needs to be addressed if you otherwise qualify.

Further, you would enter any interest you paid as an itemized deduction if you, in fact, itemize.

You might want to run this past Support.

How do I contact TurboTax? (intuit.com)

[Drindin]

And where does the interest that I receive from the buyer go?

[Anonymous_ · Accepted solution]

You would enter interest you received in the same manner as any other interest you received during the tax year (i.e., as if you received a 1099-INT). 

[Drindin]

Thank you. That is a very helpful tip!