In 2009, we loaned a friend $45,000 to pay off her cousin for her portion of the purchase of waterfront property on Whidbey Island, WA which adjoins another family-owned property. Her cousin refinanced his home 7 years ago with a balloon to pay cash for the property and it was time to pay him off. I approached her about loaning the money because CD rates are so low.
The money we loaned her is secured by her primary residence which has plently of equity ($180,000) even in today's market. All the paperwork was completed by a lawyer, recorded and is official.
I'm thinking the interest she paid us belongs on Schedule B but TaxAct is looking for me to enter the amount via a 1099-INT, 1099-OID, K-1 or as a seller-financed mortgage. I'm guessing I should use the seller financed mortgage form as it will get the required info onto Schedule B.
I will send her a report of how much interest she paid which I assume she will put on her Schedule A, Line 11, "Home mortgage interest not reported to you on Form 1098."
Does that sound right?
The money we loaned her is secured by her primary residence which has plently of equity ($180,000) even in today's market. All the paperwork was completed by a lawyer, recorded and is official.
I'm thinking the interest she paid us belongs on Schedule B but TaxAct is looking for me to enter the amount via a 1099-INT, 1099-OID, K-1 or as a seller-financed mortgage. I'm guessing I should use the seller financed mortgage form as it will get the required info onto Schedule B.
I will send her a report of how much interest she paid which I assume she will put on her Schedule A, Line 11, "Home mortgage interest not reported to you on Form 1098."
Does that sound right?