A tax question about seller financing and private lending.

[Bob Jones]

Hi,

In the past, I've explored the possibility of selling homes with seller financing. To my great dismay, I discovered that if you do this too frequently, you'll be classified as a dealer. As such, you will have to pay taxes on the entirety of the note up front. Obviously, that would be a big inconvenience. 

I'm just exploring my options, and I had an idea. What if I sold a home, and then gave someone an unsecured private loan? If they stop making payments, I can then put a judgment on the house. 

I'm not saying I'm going to pursue this option. But, I'm just wondering if it would work. If I do this, will I be taxed on the money I make over the course of the year, as opposed to being taxed on the entirety of a note up front?