Is there a way to deduct the interest I pay on a wrapped mortgage?

Forum|Forum|6 years ago
December 7, 2019
13 replies
163 views

On an installment sale the interest I receive is reported on a Sch B, but where do I deduct the interest that I pay on the underlying mortgage?

Lacerte Tax

This topic has been closed for replies.

Best answer by sjrcpa

Form 4952 Investment interest

J

johnwinston12Author

Level 3

This was on a rental property that was sold many years ago. In the past the interest on the wrapped mortgage was deducted from the interest received on the installment payments. The net interest is what was being reported on Sch B. I am trying to correct the prior problems and report it correctly. Does it have to go to 4952 and ultimately end up on Sch A or should it ultimately end up on some other form? They won't qualify to file Sch A and it will increase their income by a few thousand dollars if it has to be reported there. Please advise.

sjrcpa

Level 15

The net to Sch B approach was wrong. i know of no other way than 4952. If they can't itemize, they can't. They are getting a larger standard deduction and lower income tax rates.

The more I know the more I don’t know.

J

johnwinston12Author

Level 3

I appreciate your answer. I was just trying to see if there was something I was overlooking that would allow me to push it to a Sch E or something instead of the A. I knew that netting was wrong. That was how it was handled before by one of the nationwide preparers. There are a lot of other problems that I am trying to correct also. Thanks!

sjrcpaAnswer

Level 15

Form 4952 Investment interest

The more I know the more I don’t know.

abctax55

Level 15

@johnwinston12 - did you give Susan a no vote for her accurate answer?
I lost a client years ago over this issue - they didn't like the F 4952 position either....

HumanKind... Be Both

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