Sale of Rental Property

Forum|Forum|5 years ago
March 9, 2021
5 replies
46 views

Client sold rental property during the year and is holding the Mortgage with the Buyer.

When using the Installment method, The overall Value, Basis is a lost and normally you can't use the Installment method when there is no Profit. How do I present this on the return for 2020 and how do I record the principle payments going forward since there is no

ProSeries Basic

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T

TaxGuyBill

If the rental property was sold at a loss, just report the sale of the rental property in the year it was sold.

There is no need to report the payments of Principal. Just report any interest received.

J

Jerry CAuthor

Level 4

Thank you TaxGuyBill.

But if the client is still holding the mortgage going forward, I Know I have to report the Interest, But what happens to the Principle payment. There is no Loan/Payable to offset. So at this point does the client holding the mortgage just pocket the principle and not report?

thanks for your advice

sjrcpa

Level 15

If you are making accounting entries there is now a Loan Receivable. Principal payments received reduce this receivable.

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

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