Publication 936 - Home Mortgage Interest Deduction

governmental unit is a person for purposes of

on a mortgage that was for your home, and the

management, maintenance, or care of

furnishing the statement.

other person received a Form 1098 showing the

corporate property for the benefit of the

The statement for each year should be sent

interest that was paid during the year, attach a

tenant-stockholders.

to you by January 31 of the following year. A

statement to your return explaining this. Show

copy of this form will also be sent to the IRS.

how much of the interest each of you paid, and

The statement will show the total interest you

give the name and address of the person who

Stock used to secure debt. In some cases,

paid during the year, any mortgage insurance

received the form. Deduct your share of the

you cannot use your cooperative housing stock

premiums you paid, and if you purchased a main

interest on Schedule A (Form 1040), line 11, and

to secure a debt because of either:

home during the year, it also will show the de-

print “See attached” next to the line. Also, de-

•

Restrictions under local or state law, or

ductible points paid during the year, including

duct your share of any qualified mortgage insur-

•

seller-paid points. However, it should not show

ance premiums on Schedule A (Form 1040),

Restrictions in the cooperative agreement

any interest that was paid for you by a govern-

line 13.

(other than restrictions in which the main

ment agency.

Similarly, if you are the payer of record on a

purpose is to permit the tenant-

As a general rule, Form 1098 will include

mortgage on which there are other borrowers

stockholder to treat unsecured debt as se-

only points that you can fully deduct in the year

entitled to a deduction for the interest shown on

cured debt).

paid. However, certain points not included on

the Form 1098 you received, deduct only your

However, you can treat a debt as secured by the

Form 1098 also may be deductible, either in the

share of the interest on Schedule A (Form

stock to the extent that the proceeds are used to

year paid or over the life of the loan. See the

1040), line 10. Let each of the other borrowers

buy the stock under the allocation of interest

earlier discussion of

Points

to determine

know what his or her share is.

rules. See chapter 4 of Publication 535 for de-

whether you can deduct points not shown on

Mortgage proceeds used for business or in-

tails on these rules.

Form 1098.

vestment. If your home mortgage interest de-

Prepaid interest on Form 1098. If you pre-

Figuring deductible home mortgage interest.

duction is limited under the rules explained in

paid interest in 2011 that accrued in full by Janu-

Generally, if you are a tenant-stockholder, you

Part

II, but all or part of the mortgage proceeds

ary 15, 2012, this prepaid interest may be

can deduct payments you make for your share

were used for business, investment, or other

included in box 1 of Form 1098. However, you

of the interest paid or incurred by the coopera-

deductible activities, see Table 2 near the end of

cannot deduct the prepaid amount for January

tive. The interest must be on a debt to buy, build,

this publication. It shows where to deduct the

2012 in 2011. (See

Prepaid

interest, earlier.)

change, improve, or maintain the cooperative’s

part of your excess interest that is for those

You will have to figure the interest that accrued

housing, or on a debt to buy the land.

activities. The Table 1 Instructions for line 13 in

for 2012 and subtract it from the amount in box

Part II explain how to divide the excess interest

Figure your share of this interest by multiply-

1. You will include the interest for January 2012

among the activities for which the mortgage pro-

ing the total by the following fraction.

with other interest you pay for 2012.

ceeds were used.

Your shares of stock in the

Refunded interest. If you received a refund of

cooperative

Special Rule for

mortgage interest you overpaid in an earlier

The total shares of stock in

Tenant-Stockholders in

year, you generally will receive a Form 1098

the cooperative

showing the refund in box 3. See

Refunds of

Cooperative Housing

interest, earlier.

Corporations

Limits on deduction. To figure how the lim-

its discussed in

Part II

apply to you, treat your

Mortgage insurance premiums. The amount

A qualified home includes stock in a cooperative

share of the cooperative’s debt as debt incurred

of mortgage insurance premiums you paid dur-

housing corporation owned by a ten-

by you. The cooperative should determine your

ing 2011 may be shown in box 4 of Form 1098.

ant-stockholder. This applies only if the ten-

share of its grandfathered debt, its home acqui-

See

Mortgage Insurance

Premiums, earlier.

ant-stockholder is entitled to live in the house or

sition debt, and its home equity debt. (Your

How To Report

apartment because of owning stock in the coop-

share of each of these types of debt is equal to

erative.

the average balance of each debt multiplied by

the fraction just given.) After your share of the

Deduct the home mortgage interest and points

Cooperative housing corporation. This is a

average balance of each type of debt is deter-

reported to you on Form 1098 on Schedule A

corporation that meets all of the following condi-

mined, you include it with the average balance of

(Form 1040), line 10. If you paid more deductible

tions.

that type of debt secured by your stock.

interest to the financial institution than the

amount shown on Form 1098, show the larger

Form 1098. The cooperative should give

1. Has only one class of stock outstanding,

deductible amount on line 10. Attach a state-

you a Form 1098 showing your share of the

2. Has no stockholders other than those who

ment explaining the difference and print “See

interest. Use the rules in this publication to de-

own the stock that can live in a house,

attached” next to line 10.

termine your deductible mortgage interest.

apartment, or house trailer owned or

Deduct home mortgage interest that was not

leased by the corporation,

reported to you on Form 1098 on Schedule A

(Form 1040), line 11. If you paid home mortgage

3. Has no stockholders who can receive any

Part II. Limits on

interest to the person from whom you bought

distribution out of capital other than on a

your home, show that person’s name, address,

liquidation of the corporation, and

Home Mortgage

and taxpayer identification number (TIN) on the

4. Meets at least one of the following require-

dotted lines next to line 11. The seller must give

Interest Deduction

ments.

you this number and you must give the seller

your TIN. A Form W-9, Request for Taxpayer

a. Receives at least 80% of its gross in-

Identification Number and Certification, can be

This part of the publication discusses the limits

come for the year in which the mort-

used for this purpose. Failure to meet any of

on deductible home mortgage interest. These

gage interest is paid or incurred from

these requirements may result in a $50 penalty

limits apply to your home mortgage interest ex-

tenant-stockholders. For this purpose,

for each failure. The TIN can be either a social

pense if you have a home mortgage that does

gross income is all income received

security number, an individual taxpayer identifi-

not fit into any of the three categories listed at

during the entire year, including

cation number (issued by the Internal Revenue

the beginning of Part I under

Fully deductible

amounts received before the corpora-

Service), or an employer identification number.

interest.

tion changed to cooperative ownership.

If you can take a deduction for points that

Your home mortgage interest deduction is

were not reported to you on Form 1098, deduct

b. At all times during the year, at least

limited to the interest on the part of your home

those points on Schedule A (Form 1040), line

80% of the total square footage of the

mortgage debt that is not more than your quali-

12.

corporation’s property is used or avail-

fied loan limit. This is the part of your home

Deduct mortgage insurance premiums on

able for use by the tenant-stockholders

mortgage debt that is grandfathered debt or that

Schedule A (Form 1040), line 13.

for residential or residential-related use.

is not more than the limits for home acquisition

More than one borrower. If you and at least

c. At least 90% of the corporation’s expen-

debt and home equity debt. Table 1 can help you

one other person (other than your spouse if you

ditures paid or incurred during the year

figure your qualified loan limit and your deducti-

file a joint return) were liable for and paid interest

are for the acquisition, construction,

ble home mortgage interest.

Publication 936 (2011)

Page 8

Publication 936 - Home Mortgage Interest Deduction - 2011 Page 8

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