My mother is in the process of selling her rental unit to a buyer. They have a contract laid out where the buyer is making 10-year amortized payments for 5 years, with a balloon payment at the end. When the final payment is made, the sale of the house will be completed.
- What portion of the monthly payment is reported as taxable income?
- Possibly relevant: Does the signing of the contract constitute a house sale, Or does the title have to change hands for a sale to be completed?
The IRS defines installment sales as sales in which you receive at least one payment after the tax year in which the sale took place. Since the "sale" wouldn't take place until the last payment were made, I'm not sure how this would be reported.