Reporting/claiming home interest in a private mortgage

Discussion in 'Tax' started by NadCixelsyd, Dec 9, 2009.

  1. NadCixelsyd

    NadCixelsyd Guest

    I represent a group that just wrote a mortgage for an individual. How
    does the holder of a home mortgage (us) report interest paid (by the
    homeowner) so that they can deduct it?

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    NadCixelsyd, Dec 9, 2009
    #1
    1. Advertisements

  2. NadCixelsyd

    HLunsford Guest

    NadCixelsyd wrote:
    > I represent a group that just wrote a mortgage for an individual. How
    > does the holder of a home mortgage (us) report interest paid (by the
    > homeowner) so that they can deduct it?
    >


    He may, but is not required to, send the amount of interest he is
    reporting for tax purposes in a letter so that payor can match with his
    own records and insure they both report the same figure.

    IOW, a 1098 is not required in situations not a trade or business.

    ChEAr$,
    Harlan Lunsford, EA n LA

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    HLunsford, Dec 9, 2009
    #2
    1. Advertisements

  3. NadCixelsyd

    rick++ Guest

    On Dec 9, 7:21 am, NadCixelsyd <> wrote:
    > I represent a group that just wrote a mortgage for an individual. How
    > does the holder of a home mortgage (us) report interest paid (by the
    > homeowner) so that they can deduct it?


    You dont. There is a line on 1040A for non-1098 interest for
    mortgagee.
    They will have document contracts and payments to the IRS in an audit.
    This line is intended for multiple people on a mortgage contract,
    because
    only one SS# is reported to the IRS on a 1098.
    Its also intended for private mortgages such as in your case.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    rick++, Dec 9, 2009
    #3
  4. NadCixelsyd

    Guest

    On Dec 9, 6:21 am, NadCixelsyd <> wrote:

    > I represent a group that just wrote a mortgage for an individual.  How
    > does the holder of a home mortgage (us) report interest paid (by the
    > homeowner) so that they can deduct it?


    My recommendation is for the mortgage lender to download form 1098
    from the IRS website http://www.irs.gov/pub/irs-pdf/f1098.pdf. Fill
    out Form B. Make a copy of it. Keep one copy for yourself, and send
    one copy to the person making the mortgage payments. Don't send
    anything to the IRS as there will be penalties for not following the
    font rules, etc. You can also just write a letter that has the same
    information.

    However, what kind of "group" is this? If the group is in the
    business of making loans, then you have to fill in part A of form 1098
    and mail it to the IRS. You should use an online service to fill in
    part A, just because the font and other requirements. If the group is
    parents making a loan to their child, the approach in the above
    paragraph is fine.

    But the real question is do you know how much to write in box 1
    (mortgage interest)? If the loan is fixed, then computer the
    amortization schedule. The payments are fixed, but the amount that is
    interest decreases each year over the life of the loan. If the loan
    is interest only, then the computation is even easier. If the
    interest varies each month, then the computation becomes harder
    again. And if the mortgage payer makes extra principal payments, the
    computation becomes difficult again.

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    , Dec 10, 2009
    #4
    1. Advertisements

Want to reply to this thread or ask your own question?

It takes just 2 minutes to sign up (and it's free!). Just click the sign up button to choose a username and then you can ask your own questions on the forum.
Similar Threads
  1. Arcadefreaque

    Interest paid on private mortgage

    Arcadefreaque, Feb 12, 2006, in forum: Tax
    Replies:
    12
    Views:
    3,313
    L K Williams
    Feb 16, 2006
  2. Mick

    Claiming HB on two homes due to moving form Private to RSL.

    Mick, Jul 12, 2004, in forum: UK Tax Credits and Benefits
    Replies:
    18
    Views:
    351
  3. Iain
    Replies:
    2
    Views:
    681
  4. Jon.B.Thompson

    Private Membership To Gain Private Placements, Pre IPO's

    Jon.B.Thompson, Jun 7, 2007, in forum: Microsoft Money
    Replies:
    0
    Views:
    363
    Jon.B.Thompson
    Jun 7, 2007
  5. W
    Replies:
    3
    Views:
    410
    rick++
    Dec 9, 2009
Loading...

Share This Page