Per IRS Publication 523 Selling Your Home
, page 17:Report any interest you receive from the buyer.
If the buyer is making payments to you over time (as when you provide seller financing), then you must generally report part of each payment as interest on your tax return. Report the interest as ordinary income on Form 1040, line 8a. If the buyer is using the property as a first or second home, also report the interest on Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends, to Form 1040 and provide the buyer's name, address, and social security number. There is a $50 penalty per requirement for failing to meet any of these requirements.If you're a nonresident or resident alien who doesn't have and isn't eligible to get a social security number
, you may be issued an individual taxpayer identification number (ITIN). If you don't have an ITIN, apply for one by filing Form W-7, Application for IRS Individual Taxpayer Identification Number.
For more information on installment sales, see IRS Publication 537 Installment Sales
To enter the interest income from a seller-financed mortgage into the TaxAct® program:
- From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal.
- Click Investment Income to expand the category and then click Interest income from Seller Financed Mortgage(s)
- Click Add to create a new copy of the form or Review to review a form already created
- The program will proceed with the interview questions for you to enter or review the appropriate information