How to report mortgage interest income (investment) on 2017 1040 schedule B

Forum|Forum|6 years ago
December 7, 2019
3 replies
23 views

Client receives mortgage interest income as an investment. It is not reported on a 1099-INT since it comes directly from the property owner to the client. Client has several of these and has never lived in the houses so it is not Seller Financed Mortgage.

How do I report it on ProConnect Tax Online?

ProConnect Tax Online

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Best answer by George4Tacks

I may be getting just a bit old and senile, but why can't you just list the Name and Amount on Schedule B? Input would look like this. All of this assumes you are not in the business of lending money, in which case it would be reported on Schedule C.

George4TacksAnswer

Level 15

I may be getting just a bit old and senile, but why can't you just list the Name and Amount on Schedule B? Input would look like this. All of this assumes you are not in the business of lending money, in which case it would be reported on Schedule C.

Answers are easy. Questions are hard!

abctax55

Level 15

"...in the business of lending money,"
Bingo. Thus the need for more info.

HumanKind... Be Both

abctax55

Level 15

Sounds like private party "hard money" loans. I agree, NMI to determine how this should be handled given that there are "several" of these loans.

HumanKind... Be Both

B

bottomlineAuthor

Level 2

You are correct. They are "hard money" loans. (I didn't want to use that term because I didn't know if anyone knew what it meant)

itonewbie

Level 15

You may be confused. The seller does not need to have lived in the property previously in order for the reporting requirement to apply, only that the person to whom the indebtedness is owed is the person from whom the residence was acquired. See §6109(h).

In PTO, the seller who financed the mortgage will report the interest income on Sch B with the identifying information of the buyer by entering the information under Income / Interest Income (1099-INT, 1099-OID) / Payer / Additional Payer Information.

---------------------------------------------------------------------------------Still an AllStar

B

bottomlineAuthor

Level 2

Lender never owned the house. Lender is simply loaning money for purchase or refi.

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