Where do i enter capital gain from an installment sale

Forum|Forum|6 years ago
June 6, 2019
4 replies
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I sold land in 2016. I received an installment note for the sale. I received 6 monthly payments of principal and interest. Where do I enter the gain I received from the note.

TurboTax Home & Biz Windows

JohnR

Hi:

Capital gains, losses, and 1099-B forms are all entered in the same place:

Open (continue) your return in TurboTax.
In the search box, search for investment sales and then click the "Jump to" link in the search results.
Answer Yes to the question Did you sell any investments?
- If you land on the Here's the investment sales we have so far screen, click Add More Sales.
Continue following the onscreen instructions and we'll calculate the gain or loss from the sale.

JCL22

why the principal payment amount is considered as capital gain? Please advise.

RobertG

When you report an installment sale you first calculate your profit percentage on the sale.

The percentage of the principal payment that represents profit is taxed as a capital gain.

The interest payment is reported as interest, and taxed as ordinary income.

@JCL22

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JCL22

Hi, not sure if this is a bug in the software itself or I made data entry mistake. I sold my property with 10years installment payment plan from the buyer. I actually paid the capital gain already at the same year the property is sold. But, why TurboTax is putting the yearly principal payment in the capital gain box for me, not in the ordinary interest box. I simply followed the steps provided, but this steps lead me to the enter the data in the wrong place. Please advise. I needed to fix it because I do not want to overpay since I already paid the capital gain at year 1.

RobertG

If you already paid the capital gain on the entire sale in year 1, you should not be reporting it as an installment sale.

Just report the interest you are receiving as interest received.

The tax has already been paid on the principal.

An installment sale is a sale of property where you'll receive at least one payment after the tax year in which the sale occurs.

You're required to report gain on an installment sale under the installment method unless you "elect out" on or before the due date for filing your tax return (including extensions) for the year of the sale.

You may elect out by reporting all the gain as income in the year of the sale.

Topic No. 705 Installment Sales

@JCL22

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azlari

I sold the rental property on 7 year contract in 2021 and want to delay payment of capital gain but 2021 premier keep on reporting all gain for year 2021 even if i report it as installment sale. What i am doing wrong?

LeonardS

You should review the entries for your installment sale.

To verify your entries are correct follow these steps:

Open your return in TurboTax.
In the search box, search for installment sales and select Jump to installment sales.
Check the box next to Sales of real estate, cars, or anything else for which you receive payments over two or more tax years (installment sales). Select Continue.
Answer Yes to Do you want to report an installment sale?
Follow the instructions to enter your sale details.

If you still have problems after reviewing your entries please post your question on this thread.

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azlari

Thanks for your advise. I followed your instruction and when I got to installment sale, It stated that I have already reported it in business sale and continue to report all capitol gain for this year. Will greatly appreciate how to correct it. Thanks