How to spread mortgage interest lump sum deduction to applicable prior years

USA Discussion in 'Individuals' started by Fiscquestioner007, Jan 1, 2019.

  1. Fiscquestioner007


    Jan 1, 2019
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    Self-employed individuals who normally file Schedule C and receive home office deduction, reinstated their mortgage in 2018, paying interest that had accrued over 2015-2018. They did not receive 1098s from their mortgage lender for those years and did not file taxes for those years. They will file all four years before April. For 2018, it looks like they will have a huge deduction for mortgage interest, which should be spread out to the applicable years for this, as well as property tax, late charges, and other fees. Q. Does the the Code provide a method of backward-distributing lump sum mortgage interest deductions paid in 2018 to the appropriate year? Q2. If not, could I not take the year-to-date accrued interest from the last mortgage statement of each year and use that in a "No 1098" mortgage interest deduction claim? Ditto for property taxes accrued and shown as a debt by the mortgage holder and paid on mortgagor's behalf by the bank? Apportioned late fees? Q. Are attorney's fees paid to the mortgage foreclosure law firm as part of the reinstatement deductible? (Publication 936 silent on this, but some commentary, including a debate on this forum - thread 15378, uploaded as attachment - seem favorable but inconclusive). Taxpayers do designate themselves "accrual basis" for Schedule C filing.

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    Fiscquestioner007, Jan 1, 2019
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  2. Fiscquestioner007

    kirby VIP Member

    May 12, 2011
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    IRS section 461 sets limits by when an accrued expense must get paid to be considered an expense for the return. Best to read up on that one.
    kirby, Jan 2, 2019
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