Taxes on Interest, any benefit to buying late stage notes?

[David Hite]

Good afternoon everyone!

So in my self-education on notes, of course learning about that the interest portion of payments are taxes as normal income (assuming no self-directed IRA situation).

  Is there any strategy to buying notes that are later in their amortization schedule than new notes because of that fact?  Since we are taxed on the interest portion of the repayment, the further towards the end, the lower the % of the P+I payment that is interest.

  When we get data back from our servicer, I assume (haven't bought any notes yet), that it will show how much of each payment (or total payments annually) are principle vs interest.  

  Where does the "kicker" weigh in here.  The discounted price difference, does that come into play, i.e. come across as a taxable income?  Or will we only look at the Interest portion of the payments based on the amort schedule, (even if we paid less for it?)

  Hopefully my question makes sense!

I appreciate the help!

Dave H

  For example: