Private Mortgage Note: Income or Capital Gains?

[Austin Montgomery]

I am currently working on a commercial deal and will be purchasing the property with a private loan from some local investors. They will hold a mortgage on the property, which will be amortized over 20 years, with a 5 year balloon. Is the interest portion of the monthly payment counted as personal income or capital gains? Is there any way for the private lenders to offset some of this tax liability? Is it filed as a Schedule B? I have found differing information on the internet, so thought I would ask here! Thanks!

[Chris Seveney]

@Jamie Bateman

As jamie mentioned it is not a capital gains. So if you are in a higher tax bracket it can really suck.

Not an accountant or cpa but there are many ways to reduce taxable income if you have a business such as paying kids to do some work and make sure you account properly for expenses.