Begin by entering the information as though you received Form 1098:
Under the Federal menu, choose Deductions & Credits
Expand the menu for Your Home
Click Start/Revisit next to Mortgage Interest and Refinancing (Form 1098)
Enter the lender information
On the following screen, choose The seller is financing this loan and we didn't receive a 1098
Complete the information on the screens that follow
Just enter the information as though you did receive a form showing mortgage interest.
From IRS Publication 936:
Redeemable ground rents.
In some states (such as Maryland), you can buy your home subject to a ground rent. A ground rent is an obligation you assume to pay a fixed amount per year on the property. Under this arrangement, you're leasing (rather than buying) the land on which your home is located.
If you make annual or periodic rental payments on a redeemable ground rent, you can deduct them as mortgage interest.
A ground rent is a redeemable ground rent if all of the following are true.
Your lease, including renewal periods, is for more than 15 years.
You can freely assign the lease.
You have a present or future right (under state or local law) to end the lease and buy the lessor's entire interest in the land by paying a specific amount.
The lessor's interest in the land is primarily a security interest to protect the rental payments to which he or she is entitled.
Payments made to end the lease and to buy the lessor's entire interest in the land aren't deductible as mortgage interest.
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