topic I have a loan from my family that I need to show up in my Schedule A as "mortgage interest deduction not on a 1098" line, rather than bundled into the 1098 line. Can I do that in turbo tax? in Deductions & credits

I have a loan from my family that I need to show up in my Schedule A as "mortgage interest deduction not on a 1098" line, rather than bundled into the 1098 line. Can I do that in turbo tax?

Astor — Sat, 01 Jun 2019 03:16:32 GMT

The mortgage doesn't have to be recorded as long as it's...

bwa — Sat, 01 Jun 2019 03:16:33 GMT

The mortgage doesn't have to be recorded as long as it's with family.

I know you want to believe that, but there is no exception in Sec. 163 of the statute for family debt. While someone at the IRS may have told you that, they aren't even familiar with their own publications. The IRS' Publication 936 (on Home Mortgage Interest) describes the requirement for secured debt as follows (note there is no exception for family debt):

"Secured Debt

You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that (underlining supplied):

Makes your ownership in a qualified home security for payment of the debt,
Provides, in case of default, that your home could satisfy the debt, and
Is recorded or is otherwise perfected under any state or local law that applies.

In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. In this publication, mortgage will refer to secured debt.

Debt not secured by home. A debt is not secured by your home if it is secured solely because of a lien on your general assets or if it is a security interest that attaches to the property without your consent (such as a mechanic's lien or judgment lien). A debt is not secured by your home if it once was, but is no longer secured by your home."

Publication 936 is here: https://www.irs.gov/publications/p936/ar02.html#en_US_2016_publink1000229894

"is otherwise perfected under any state or local law that...

Astor — Sat, 01 Jun 2019 03:16:35 GMT

"is otherwise perfected under any state or local law that applies." A simple note between family members IS this qualification.

It looks like you can. When you declare the new lender, t...

Astor — Sat, 01 Jun 2019 03:16:37 GMT

It looks like you can. When you declare the new lender, there's an option to declare that the seller is furnishing the loan and they didn't issue a 1098.

Checking that then leads you to supplying their information which includes a SSN or EIN. I assume to verify against that persons' tax records.

Please also note that it has to be mortgage. Mortgage int...

bwa — Sat, 01 Jun 2019 03:16:39 GMT

Please also note that it has to be mortgage. Mortgage interest is interest on a loan secured by a recorded mortgage that is a formal lien on the property. Interest on an unrecorded loan is not deductible.

This actually isn't true. The mortgage doesn't have to be...

Astor — Sat, 01 Jun 2019 03:16:41 GMT

This actually isn't true. The mortgage doesn't have to be recorded as long as it's with family. Only non-family loans have to be formally recorded. It does have to be secured by a home like any other mortgage, but a simple note held by both sides is enough (according to the folks I talked to at the IRS).