The IRS allows you to deduct the mortgage interest, private mortgage insurance and points paid for loan closings on your tax return. You can also deduct the mortgage interest on second homes and vacation homes including trailers and boats (must have sleeping, cooking and bathroom facilities).
Landlords should use the Rental Property Worksheet for reporting mortgages and taxes on rentals.
New Home Purchase
If you are a new home owner, congratulations. Please send a copy of your HUD or closing statement for the purchase- there are three reasons.
- determine real estate taxes paid by you thru closing,
- determine if any points were paid with your loan, and
- to help you determine basis information if you sell or convert to rental.
If your move was work-related, please remember to send us your moving expenses.
Form 1098 Mortgage Interest
If you received a 1098 Mortgage Interest statement from a lender, new IRS rules require the entire statement to be entered on your tax return. Please provide all pages of all 1098 mortgage statements that you receive. One more favor- if the property address is not the same as the mailing address, please scribble the property address on the form. This is critical for second homes and rentals.
The IRS allows the mortgage interest deduction of a loan that is not in your name as long as you have an interest in the property associated with the loan. For example, if your parents financed the house you live in, but you pay the mortgage and maintain the house, then you are allowed to deduct the mortgage interest.
Real Estate Property Taxes
During the recent flurry of refinancing activities, real estate taxes do not get reported on your gaggle of Form 1098s. Please let us know if real estate taxes were paid out of escrow and the amount. Remember, some states such as Colorado pay real estate taxes in arrears. This can only be captured from your HUD or closing statement. So, please send than too!
Caution- Bank of America routinely puts the real estate taxes paid on the back of their forms. Either send both pages, or scribble the amount on the front of your form.
Mortgage Interest Paid Not Reported on a Form 1098
One taxpayer’s deduction is another taxpayer’s income. So, the IRS requires that we report the name, address and social security number of individual or company who provided financing and charged you interest if you intend to deduct it.
If you intend to deduct mortgage interest not reported on a 1098 Mortgage Interest Form, please provide the name, address and SSN of the person or company below.