Owner financing interest report to buyer
We just did a owner financing on some open land and the buyer is making payments to us monthly. He has requested a interest year end statement to file with his tax return. How do we go about doing this and do we need a certain form to give to him?
Thank you for your question. You do need to provide the buyer with the information that he has requested. However, there is no specific form that you need to supply. When you originated the financing agreement for the land, was an amortization schedule created? If one wasn’t created, you can easily create one (there are many sites available online that allow you to generate one). The amortization schedule takes the original loan amount, the interest rate on the loan, and the term of the loan, and provides you with a schedule that shows how much of each payment is applied to principal, and how much is applied to interest.
Using the schedule, you can compare the number of payments made, and add up the amounts for the corresponding principal and/or interest payments. This is the information that you would then supply to the buyer.
I hope this helps!
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