Do I have to claim interest received from a home I sold as “for sale by owner?”

Jan 25, 2019

I sold a home a few years back. I did it as a “for sale by owner,” in which the buyer makes payments to me on a monthly basis for the next 30 years. I claimed the sale of the house the year I sold it, but for the past couple of years I hadn’t claimed anything from that house. I did research to see if I was in any red tape. I’ve read the instructions on Form 1098, and it says to only claim the interest received if it is your trade. I work in information technology. Am I doing this right? Do I not have to claim interest received?

You have entered into an installment sale. You can opt out of the installment sale rules, which you have done. That means that you don’t have to report the capital gain over 30 years, but can report it all in one year. The only thing to report over the next 30 years, or as long as the buyer is making payments, is the interest income on the note.  

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Susan D. Jarvis, CPA, is a sole practitioner in Nazareth, Pa.

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