“Where can I report about the interest I paid him for this personal loan in 2010?”----> As you can see, as long as the loan is made to you at a low interest rate( lower than proper market rate), then the IRS may impute interest. This means that your dad MUST recognize interest income equal to the IRS imputed interest, and you, as a borrower, should have an implied interest payment to the lender, your dad. Each month, the IRS publishes applicable federal rate, AFR. Loans to family members (gift loans) fall under the imputed interest rules. IRS imputes interest on the gift loan when the interest charged is LESS than the AFR ( I am not sure if this true in your case).Ifyou pass this rule, then you can report your interest expenses on Sch E of 1040. One of your expenses is depreciation. Be sure to take depreciation9 27.5 years, I guess) because when/if you sell the property it will be be treated as though you had.You may be subject to self-employment taxes and need to pay estimated taxes on your rental income , depending on the situation. You can deduct your mortgage interest as a rental expense.