HERO loan interest deduction on property taxes pain in 2018 and 2019

[Scrunchster]

I have a HERO loan in California.  The annual payment is on my property taxes and I paid part of my taxes in 2018 and part in 2019.

I think I can deduct the interest portion of the HERO loan.  There is no 1098 form from the HERO program. I do have a table provided by the HERO financer that tells me how much the annual interest amount it.

Do I treat the interest deduction like a property tax and claim part in 2018 and part in 2019, do I treat it like a property loan and deduct the interest in the year it was charged, or is there a hidden option #3?

[JulieR]

Although included in the tax bill, the HERO payments are separately stated and not deductible as property tax. But, the portion of the HERO payment that represents interest is generally deductible as home mortgage interest.

[Scrunchster]

Thanks for the fast response!  Do I deduct the interest for the year the interest accrued or the year I paid the tax bill?

[JulieR]

Deduct the interest applicable to 2018 on your current return and the amount applicable to 2019 on next year's return.

[Scrunchster]

Thanks!

[Rivers]

I have the same basic question but where/how do I enter the deduction? There is no 1098 issued and the only option Turbo Tax gives for no 1098 situations is to identify it as seller-financed loans. Is that the proper place to claim it?

[CM00]

I have the same question for 2020.

[DaveF1006]

You may enter the 1098 as if you received one during the year. Do not enter this as a seller-financed loan. 

1. Log into Turbo Tax
2. go to federal>deductions and Credits>Your Home>Mortgage Interest and Refinancing (Form 1098)
3. Did you pay any home loans in 2020? yes
4. Now enter the answers to the questions as if you have a 1098.
5. Put the mortgage interest in Box 1
6. For the mortgage balance outstanding, if you already have a 1098 for the original loan, Put 0 in this box. If this is your only 1098, put in the mortgage balance outstanding.
7. Do not put any property taxes in this form though because property taxes are not deductible on Hero loans.

[CM00]

Do I put the balance of the Hero loan as the outstanding mortgage principal or the balance of the home loan?

[DaveF1006]

Enter the mortgage loan balance shown on the 1098 for the Hero Loan.