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Mortgage interest deduction without 1098 from private lender

Hello,

 

I got my house and I took a loan from a private lender for over 190K. The lender didnt send me 1098 but sent me a statement which shows for every month how much interest I paid and what is the remaining balance.

 

Now I have the following questions:

 

  1. Is the private lender obligated to send me a 1098 (they’re not in the lending business, just an individual that has the funds available) ?
  2. How can I claim my mortgage interest deductible on my tax return if the lender refuses to issue a 1098 or provide their SSN / EIN information?

Thanks a lot

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5 Replies
MinhT1
Employee Tax Expert

Mortgage interest deduction without 1098 from private lender

The private lender who is not in the money-lending business (lie banks) is not obligated to issue you form 1098.

 

But you can still the interest paid as mortgage interest if the money is used to buy or build your home and the loan is secured by the home.

 

The lender has to give you his tax ID (SSN or EIN), otherwise you cannot claim the interest.

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rjs
Level 15
Level 15

Mortgage interest deduction without 1098 from private lender

The private lender is not obligated to send you a Form 1098.

 

What exactly do you mean by a "private lender"? Is the mortgage loan from the person that you bought the home from (a seller-financed loan)? If so, enter it in the regular mortgage interest section. When you get to the screen that says "Do any of these situations apply?" select "This is a seller-financed loan and I did not receive a 1098."


If it's not a seller-financed loan, is the loan secured by your home? If not, you cannot deduct the interest. See the definition of Secured Debt in IRS Publication 936.


Mortgage interest that was not reported on Form 1098 has to be entered on Schedule A line 8b. If it's not a seller-financed loan the entry can only be made in forms mode. That means there is no way to make the entry in TurboTax Online. Forms mode is only available in the desktop TurboTax software, not in TurboTax Online.


In forms mode, enter the interest directly on Schedule A line 8b. Do not use the Home Mortgage Interest Worksheet. But when you enter it this way, TurboTax will not calculate any limits that might apply to the deduction. See "Part II. Limits on Home Mortgage Interest Deduction" in IRS Publication 936 to see if any limits apply to your deduction. If it's not a seller-financed loan you do not need the lender's Social Security number or EIN.


Whatever the situation is, keep in mind that you cannot deduct your entire mortgage payment. You can deduct only the portion of the payment that is interest.


Note that mortgage interest is an itemized deduction. It will not make any difference in your tax or your refund unless your total itemized deductions are more than your standard deduction.


You cannot claim a deduction for mortgage interest, or any other itemized deductions, in TurboTax Free Edition. You will have to upgrade to Deluxe.

 

Mortgage interest deduction without 1098 from private lender

@MinhT1    Thank you for your reply. My lender refused to provide me with their tax ID (SSN / EIN). I’m assuming because they probably didn’t report the interest income that they received from me to the IRS. So I’m guessing I’m on the short end of the stick then.

Mortgage interest deduction without 1098 from private lender

@rjs

Thank you for your reply. No, this not a seller-financed loan since my private lender is a different individual from the seller. Also my mortgage is secured by my home.

 

What is the standard deduction for tax year 2024 for single filer? What are some of the other tax deductions (like property taxes) or expenses (home repairs) that I can report if I want to itemized instead of taking the standard deduction?

rjs
Level 15
Level 15

Mortgage interest deduction without 1098 from private lender

If it's not a seller-financed loan, and you make the entry in forms mode as I described above, you do not need the lender's tax ID.


For 2024 the standard deduction is $14,600 for someone who is single, under 65, not blind, and cannot be claimed as a dependent.


The total itemized deduction for state and local taxes is limited to a maximum of $10,000 per year ($5,000 if you are married filing separately). This maximum applies to the total of real estate tax, personal property tax, and either state and local income tax or state and local sales tax.


Repairs to your home are not tax deductible.


Other common deductions are medical expenses and contributions to charity. Only the amount of medical expenses in excess of 7.5% of your AGI is deductible.

 

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