Instructions For Form 1098 - 2017 (Page 3 of 6) in pdf

person must report, and be signed by the designator and

Program funded by the Housing Finance Agency

the designee. A designee may report points on Form 1098

Innovative Fund for the Hardest Hit Housing Markets

(as having been paid directly by the payer of record) only

(HFA Hardest Hit Fund) if the mortgage servicer notifies

if the designation agreement contains the designator's

the homeowner that the amounts reported on the Form

representation that it did not lend such amount to the

1098 are overstated because they include governmental

payer of record as part of the overall transaction. The

subsidy payments. State housing finance agencies

agreement need not be filed with the IRS, but the

receiving funds allocated from the HFA Hardest Hit Fund

designator must keep a copy of it for 4 years after the

may comply with the mortgage interest reporting

close of the year in which the loan is made.

requirement by reporting payments on either Form

1098-MA, Mortgage Assistance Payments, available at

A designated qualified person is subject to any

, or on the statement described

applicable penalties as if it were the interest recipient.

in section 4.03 of Rev. Proc. 2011-55, available at

Thus, a designator is relieved from liability for any

For more

applicable penalties.

information, see Notice 2015-77, available at

Nonresident Alien Interest Payer

irb/2015-47_IRB/ar04.html.

You must file Form 1098 to report interest paid by a

Seller Payments

nonresident alien only if all or part of the security for the

Do not report in box 1 of Form 1098 any interest paid by a

mortgage is real property located in the United States.

seller on a purchaser's/borrower's mortgage, such as on a

Report the interest based on the following.

“buy-down” mortgage. For example, if a real estate

If the interest is paid within the United States, you must

developer deposits an amount in escrow and tells you to

request from the payer the applicable Form W-8

draw on that escrow account to pay interest on the

(withholding certificate) as described in Regulations

borrower's mortgage, do not report in box 1 the interest

section 1.1441-1(e)(1).

received from that escrow account. Also, do not report in

If the interest is paid outside the United States, you

box 1 any lump sum paid by a real estate developer to pay

must satisfy the documentary evidence standard

interest on a purchaser's/borrower's mortgage. However,

described in Regulations section 1.6049-5(c).

if you wish, you may use box 11 to report to the payer of

record any interest paid by the seller. See Points, next, for

Payer of Record

information about reporting seller-paid points in box 6.

The payer of record is the individual carried on your books

Points

and records as the principal borrower. If your books and

records do not indicate which borrower is the principal

You must report certain points paid for the purchase of the

borrower, you must designate one.

payer of record's principal residence on Form 1098. You

must report points if the points, plus other interest on the

If you permit a subsequent purchaser of the property to

mortgage, are $600 or more. For example, if a borrower

assume the loan without releasing the first purchaser from

pays points of $300 and other mortgage interest of $300,

personal liability, the subsequent purchaser is the payer of

the lender has received $600 of mortgage interest and

record. Such subsequent purchaser's name, address, and

must file Form 1098.

TIN must appear on Form 1098.

Report the total points on Form 1098 for the year of

Multiple borrowers. Even though there may be more

closing regardless of the accounting method you use to

than one borrower on the mortgage, you are required to

report the points as income for federal income tax

prepare Form 1098 only for the payer of record, and only if

purposes.

such payer of record is an individual, showing the total

interest received on the mortgage. Even if an individual is

Who must report points. The lender of record or a

a coborrower, no Form 1098 is required unless the payer

qualified person must file Form 1098 to report all points

of record is also an individual.

paid by the payer of record in connection with the

purchase of the principal residence. If a designation

Payments by Third Party

agreement is in effect for a mortgage, only the person

Report all interest received on the mortgage as received

designated in the agreement must file Form 1098 to report

from the borrower, except as explained under Seller

all points on that mortgage. See

Designation

agreement,

Payments, later. For example, if the borrower's mother

earlier.

makes payments on the mortgage, the interest received

Amounts received directly or indirectly by a mortgage

from the mother is reportable on Form 1098 as received

broker are treated as points to the same extent they would

from the borrower.

be treated as points if paid to and retained by the lender of

However, do not report mortgage interest received

record. The lender of record must report those points paid

from any governmental unit (or any subsidiary agency).

to a mortgage broker.

For example, do not report any interest received as

Reportable points. Report on Form 1098 points that

housing assistance payments from the Department of

meet all the following conditions.

Housing and Urban Development (HUD) on mortgages

1. They are clearly designated on the Settlement

insured under section 235 of the National Housing Act.

Statement (Form HUD-1) as points; for example, “loan

The IRS will not assert information reporting penalties

origination fee” (including amounts for VA and FHA

against mortgage servicers that report as interest

loans), “loan discount,” “discount points,” or “points.”

mortgage assistance payments received under a State

-3-

Instructions for Form 1098 (2017)

Instructions For Form 1098 - 2017 Page 3

Related Articles

Related forms

Related Categories