IRS Form 1098, Mortgage Interest Statement, is used by a lender to report mortgage interest and points of $600 or more. Mortgage interest is the amount of interest payments that the borrower pays in a year on a loan secured by real property. Real property is land and generally anything built on it, growing on it, or attached to the land. Real property includes certain manufactured loans. Points refer to certain points paid by the borrower at the time of purchase of a primary residence.
The lender furnishes Form 1098 to the borrower and the IRS. It prepares three copies of Form 1098: Form A, Form B, and Form C. Form A is provided to the IRS, Form B is provided to the borrower, and Form C is retained by the lender for its records. The form is generally issued by the Servicing department of the lender. Alternatively, the lender may have a separate regulatory reporting or IRS reporting group within its Servicing department.
Payer of Record is the borrower that the lender designates as principal borrower in its records. In case of a single borrower on a loan, the sole borrower is the Payer or Record. In case of multiple borrowers on the loan, the lender will select one of the borrowers as principal borrower. IRS allows the Form 1098 to be issued only to the principal borrower, provided the principal borrower is an individual. An individual includes sole proprietorship, but does not include a corporation, partnership, trust, estate, association, or company (other than a sole proprietor)
If the payments are made by a third party, then the Form 1098 is issued to the borrower showing the total payments as if the payments were made by the borrower. For example, if the borrower's mother makes interest payments on behalf of the borrower then the Form 1098 would be issued to the borrower showing the total payments. The mother will not receive any Form 1098.
Seller Payments are not reported on Form 1098.
Below is a table that presents the requirement to issue a Form 1098 under different circumstances.
Any person who is engaged in a trade or business and in the course of such trade or business receives mortgage interest of $600 or more from an individual. The trade or business need not be mortgage lending. Therefore, not only mortgage lenders but any entity who receives mortgage interest, such as real estate developers, Servicers, or certain collection agents.
|Case No||Number of Borrowers||Payer of Record||Is 1098 Issued|
|Case 1||Single Borrower||Individual||Yes|
|Case 2||Single Borrower||Non - Individual||No|
|Case 3||Multiple Borrowers||Individual||Yes|
|Case 4||Multiple Borrowers||Non - Individual||No|
Form 1098 is filed in the year following the year in which the mortgage interest or points were received. The due dates are:
Form 1098 contains the information listed below. Note that the form will contain information about the person who paid the interest (payer of record) whether it is the borrower, a co-borrower, or another person.
IRS allows deducting certain mortgage interest and points from the income of an individual tax payer. Form 1098 provides the information related to the points and interest to the borrower and the IRS.
You should retain the Form 1098 for at least 3 years from the date when the return is due. Longer time periods may apply under specific circumstances such as when you do not file a return or file a fraudulent return. IRS Publication 17 provides general record retention guidelines. You should contact your tax preparer for guidance for your specific circumstances.
State laws may also require a longer retention periods.
IRS Form 1098 webpage provides filing instructions, recent developments, and information about any future updates or developments affecting Form 1098.
Updated: Aug 29, 2013