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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?
Best Answer Click here
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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!
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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!
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Bingo. Thus the need for more info.
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Still an AllStar
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It's not really a business. Client invests in mortgage receivables instead of in the stock market
If you loaned your next door neighbor $1,000 and they paid you back $1,050, how would you report the $50 interest income with ProConnect?
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If you believe this is reportable on Sch B only and no 1099-INT should be required, you can simply enter the "Name of Payor" and the amount received under "BANKS, S&L, ETC." on the Quick Entry screen for interest Income.
Still an AllStar
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This *sounds* to me like the client may just be in the business of lending money....so perhaps @bottomline you are "underthinking" this.
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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.
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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.
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"It is not reported on a 1099-INT since it comes directly from the property owner to the client."
Do you mean the seller is a third party and the loan was extended to the seller instead of the buyer? How are these loans structured? What is the collateral?
"Client receives mortgage interest income as an investment...Client has several of these..."
What kind of note or agreement was executed for these? What are the terms and interest rates charged? It is starting to sound a bit "funny".
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Mortgage broker has a person that wants to purchase or refi a home. They can't get a traditional bank loan for one of many different reasons (mobile home, bad credit, loan amount too small, building vs land value doesn't meet criteria, etc). Since it doesn't qualify for a "traditional" mortgage, a "hard money lender" loans the money. It is secured by the real estate (generally less than 50% loan to value) and amortized over 10-30 years. Interest rates are 10-15%.
Drake and ProSeries software handle these quite easily. ProConnect Tax doesn't want to handle interest received unless it is via 1099-INT
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