Interest income is taxed at the same rate as ordinary income.

check with your CPA depending on your basis to go from a property you can 1031 to ordinary income tax it might not be worth the extra time and risk involved.

If seller does qualify for the primary residence exemption she will not pay tax on the capital gain portion of the sale but the interest would be taxed as ordinary income.

Either pay in one lump sum or in four equal payments (04/18/22, 06/15/22, 09/15/22, 01/17/23).a  $78,255 Total Tax =  $58,427.45 ($28,549 Long Term Capital Gain x 20% tax rate + $351,451 Long Term Capital Gain x 15% tax rate) + $19,827.5 ($100,000 Unrecaptured Sec 1250 Gain +$ 25,000 social security benefits x 85% - $12,950 standard deduction subject to ordinary income tax brackets)b.

Ergo its highly doubtful they report.. what they can do though is issue you a 1099C which will be ordinary income to you.. and create a mess with the IRS.they could sue you for a judgment.If they go the DIL route make sure you have an attorney negotiate out the fact that no deficieancy can be done and that they will not issue the 1099C against you.

BTW - once ownership crosses the one year mark it becomes a capital gain vs ordinary income

Flipping houses is ordinary income.

One is by ordinary first class mail.

In that case, your rent is considered active income, subject to all taxes at your ordinary rate including self employment tax I believe. 

"Gains or losses from the sale, exchange, or other disposition of property" are not UBTI if not from "property held primarily for sale to customers in the ordinary course of the trade or business."