A client sold a house to a buyer as a seller-financed mortgage. However, the client still had a mortgage before selling. So the client took out an unsecured loan from a bank in order to payoff the mortgage first. Then, had sold it to the buyer as a seller-financed mortgage. So, the question is..... How do you treat the interest income and can you deduct the interest on the unsecured loan as an expense?
the interest income is taxabke the same as interest fom a bank, but Schedule B requires the payer's info.
Possibly the interest he pays on the unsecured loan is investment interest.
The more I know, the more I don't know.
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