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Michael16
Level 2

1098 for Mortgage Originating in December?

My wife and I purchased a home in December of 2020, but didn't make our first mortgage payment until January of 2021. The home was purchased via a legal,, secured loan from my parents (my parents are acting as the bank). They did not provide us a 1098, though I don't believe that is required.

 

My question is do we need to note anything on our 2020 taxes about the mortgage since the first installment wasn't paid until 2021? Should I complete the steps for the 1098 anyway, and just keep the interest at $0?

3 Replies
ToddL99
Expert Alumni

1098 for Mortgage Originating in December?

Since you did not make any payments (mortgage interest or principal) in 2020, do not take a deduction for mortgage interest in 2020. Complete the Form 1098 interview and enter "0" in the "Mortgage interest paid" field.

 

As individuals, you are considered "cash-basis" taxpayers. You only owe tax on income you receive and can only claim a deduction for items that have been paid during the tax year in question.

Michael16
Level 2

1098 for Mortgage Originating in December?

Thank you. I assume I also complete boxes 2 and 3 (outstanding mortgage principal and mortgage origination date) as well, with our full loan amount and closing date as the values? We do not pay PMI or have any points paid to my knowledge, so boxes 4-6 wouldn't apply.

ToddL99
Expert Alumni

1098 for Mortgage Originating in December?

Yes,  complete boxes 2 and 3 of the Form 1098 Mortgage Interest interview (outstanding mortgage principal and mortgage origination date) as well, with your full loan amount and the actual closing date.

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