Instructions For Form 1098 - 2006
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27Instructions for Payer/Borrower
amounts are deductible by you only in certain circumstances. Caution:
A person (including a financial institution, a governmental unit, and a
If you prepaid interest in 2006 that accrued in full by January 15, 2007,
cooperative housing corporation) who is engaged in a trade or business
this prepaid interest may be included in box 1. However, you cannot
and, in the course of such trade or business, received from you at least
deduct the prepaid amount in 2006 even though it may be included in
$600 of mortgage interest (including certain points) on any one
box 1. If you hold a mortgage credit certificate and can claim the
mortgage in the calendar year must furnish this statement to you.
mortgage interest credit, see Form 8396, Mortgage Interest Credit. If
If you received this statement as the payer of record on a mortgage
the interest was paid on a mortgage, home equity, line of credit, or
credit card loan secured by your personal residence, you may be
on which there are other borrowers, furnish each of the other borrowers
with information about the proper distribution of amounts reported on
subject to a deduction limitation.
this form. Each borrower is entitled to deduct only the amount he or
Box 2. Not all points are reportable to you. Box 2 shows points you or
she paid and points paid by the seller that represent his or her share of
the seller paid this year for the purchase of your principal residence
the amount allowable as a deduction for mortgage interest and points.
that are required to be reported to you. Generally, these points are fully
Each borrower may have to include in income a share of any amount
deductible in the year paid, but you must subtract seller-paid points
reported in box 3.
from the basis of your residence. Other points not reported in this box
If your mortgage payments were subsidized by a government
may also be deductible. See Pub. 936 or Schedule A (Form 1040)
agency, you may not be able to deduct the amount of the subsidy. See
instructions.
the instructions for Form 1040, Schedule A, C, or E for how to report
Box 3. Do not deduct this amount. It is a refund (or credit) for
the mortgage interest. Also, for more information, see Pub. 936, Home
overpayment(s) of interest you made in a prior year or years. If you
Mortgage Interest Deduction, and Pub. 535, Business Expenses.
itemized deductions in the year(s) you paid the interest, you may have
Account number. May show an account or other unique number the
to include part or all of the box 3 amount on the “Other income” line of
lender has assigned to distinguish your account.
your 2006 Form 1040. No adjustment to your prior year(s) tax return(s)
is necessary. For more information, see Pub. 936 and “Recoveries” in
Box 1. Shows the mortgage interest received by the interest recipient
Pub. 525, Taxable and Nontaxable Income.
during the year. This amount includes interest on any obligation
secured by real property, including a home equity, line of credit, or
Box 4. The interest recipient may use this box to give you other
credit card loan. This amount does not include points, government
information, such as the address of the property that secures the debt,
subsidy payments, or seller payments on a “buy-down” mortgage. Such
real estate taxes, or insurance paid from escrow.
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