User:Churrupy/Form 1098
Form 1098, Mortgage Interest Statement, is an American IRS form used to report earned mortgage interest income.
Filing Requirements[edit]
Lender and Payer of Record[edit]
The Lender of Record is the one who is named as the lender on loan documents and has the right to receive payment, even if the lender intends to sell or transfer the loan to a third party.
Similarly, the Payer of Record is the borrower paying the interest, or a person designated as such for records. The payer of record is the current owner of the property, even if the previous owner is still liable for mortgage payments. Even if there are multiple borrowers for one property, only the payer of record is the payer that is recorded on Form 1098 regardless of who technically paid the interest.
Who Must File[edit]
A mortgage as defined for Form 1098 is any piece of land with development on it that secures a loan. The property must have a home built on it of at least 400 square feet and a minimum width of 102 inches, and is in a fixed location (eg, not a mobile home). If the property in question does not meet those requirements, a Form 1098 is not required to be filed.
Anyone who has received more than $600 in interest from mortgages must file Form 1098. Form 1098 can still be filed if interest income is less than $600, but it's not required. Form 1098 is filed regardless if the interest received is through normal business activity, even if lending money isn't part of the business. Governmental units and cooperative housing coperations also must file Form 1098, as well as banks and other collection agencies gathering money on behalf of a lender. Foreign corporations receiving mortgage interest over a property that's totally or mostly in the United States must also file a Form 1098. Form 1098 must also be filed if the person paying the interest is a nonresidential alien.
Money paid by the seller on behalf of the purchaser's mortgage (such as through an escrow account or paid by a real estate developer) is not counted towards the income reported on Form 1098.
If the interest is prepaid, then said interest is only recorded for the year in which the interest would accrue if it were not prepaid.
Reimbursements of greater than $600 must also be recorded, but only if the one being reimbursed has already paid over $600 to the one reimbursing. Reimbursements of less than $600 do not need to be recorded, and reimbursements are filed for the year they are given, not amended on previous years' statements.
Mortgage Points[edit]
Certain kinds of points are to be recorded on Form 1098 if they meet the following conditions:
- The points are designated as points on the Settlement Statement, such as calling them "loan origination fee", "loan discount", "discount points", or simply "points"
- The points are computed as a percentage of the principle loan amount
- The points are charged in the same area the loan was issued and is comparable to other points charged in the same area
- The points (and the loan they're attached to) pay for the payer of record's principle residence
- The points are paid directly by the payer of record. Points are considered to be paid directly if they meet one of the following requirements:
- The points were paid by the payer of record and were not borrowed from the lender of record
- The points were paid by the seller on behalf of the buyer of record
- If the total of points paid plus other mortgage interest is equal to or greater than $600
Points paid for a loan to build a property must also be recorded on a 1098 if they meet the above conditions, and the principle amount of the loan does not exceed $1 million.
Exceptions[edit]
Interest receivers don't have to file a Form 1098 if the interest was paid at least in part by a corporation, partnership, trust, estate, association, or company.
Form 1098[edit]
Form 1098 is five pages long. Three pages include identical copies of the form itself, two copies in black, and one in red, as well as two pages of instructions. Copy A of the form goes to the IRS, while copy B is for the borrower's records, and copy C is for the lender's records. Only officially printed versions of Form 1098 can be filed with the IRS. Personally printed copies are not considered valid IRS forms.
The form requires the lender's name, address, phone number, and federal identification number, as well as the borrower's name, address, phone number, and taxpayer identification number, as well as an optional account number, if applicable.
- Box 1: Mortgage interest received from borrower during that calendar year, not including points
- Box 2: The principle yet to be paid as of January 1 of filing year
- Box 3: The date of the beginning of the mortgage
- Box 4: Reimbursements given that calendar year
- Box 5: Mortgage insurance premiums, if greater than $600 for the property being insured
- Box 6: Points paid
- Box 7: A checkbox indicating whether the borrower address on the form is the same address that the form is reporting on
- Box 8: If the property is at a different address, then the address of that property
- Box 9: Property description, if it doesn't have an address
- Box 10: Total number of mortgaged properties, if number is greater than one
- Box 11: Any other payments to report, such as escrow payments or real estate taxes
References[edit]
irs website
http://www.investopedia.com/terms/f/form_1098.asp
http://homeguides.sfgate.com/1098-mortgage-interest-statement-irs-46188.html
http://www.onlinefiletaxes.com/content/FAQs-about-form-1098.aspx