I sent payments to cover interest on a HELOC loan. Form 1098 received does not show any payment. Do I report what was sent and check the "different" box in TurboTax?
Also, do I report all interest charged to the loan account or only the amount I re-paid?
You can only deduct the amount paid. And yes show the actual amount paid in the "other" Box.
The interest for a home equity loan or HELOC (home equity line of credit) is an allowable deduction if you itemize. You'll need to meet some conditions:
- The loan or line of credit is secured (put up as collateral to protect the lender) by your main home or a second home.
- The home securing the loan must have sleeping, cooking, and toilet facilities.
- The loan or line of credit must be used to buy, build or substantially improve your home. This requirement began with tax year 2018 and extends through 2025.
- You can only deduct the portion of the loan or line of credit you used to buy, build, or substantially improve the home that is used to secure the loan or line of credit. This requirement began with tax year 2018 and extends through 2025. If you’ve ever used part of this loan to pay for things other than this home, you cannot deduct the interest from that amount of the loan, even if the transaction didn’t take place this year.
- To get the full deduction, your mortgage debt doesn’t exceed $1,000,000 if you got your loan between October 13, 1987 and December 15, 2017 or $750,000 if you got your loan after December 15, 2017.
- You or someone on your tax return must have signed or co-signed the loan.
- If you rented out the home, you must have used the home more than 14 days during the tax year or 10% of the number of days you rented it out, whichever is greater.
In most cases, you can deduct your interest. How much you can deduct depends on the date of the loan, the amount of the loan, and how you use the loan proceeds.
The IRS has more information on how much you can deduct and other relevant details.
Thank you for the reply to my post.
However, I incorrectly described the loan. It is NOT a HELOC loan, it is a HECM (Reverse Mortgage Line of Credit). Does this change things? If so, can I still deduct points, interest, mortgage insurance? Do I check the HELOC box in TurboTax or list in some other way?
Interest on reverse mortgage lines of credit is only deductible when it is paid; typically, the interest accrues and is only paid when the loan matures (i.e. is paid off).
Interest (including original issue discount) accrued on a reverse mortgage isn't deductible until you actually pay it (usually when you pay off the loan in full). Also, a deduction of interest may be limited because a reverse mortgage generally is subject to the limit on home equity debt, which is not deductible unless the proceeds are used to buy, build, or substantially improve the home that secures the loan. For information on deducting mortgage interest and the debt limit that applies, see Publication 936, Home Mortgage Interest Deduction.
If you are paying the interest as it accrues AND meet the other mortgage interest deduction limitations (mortgage balance and use of funds), then it is deductible in the year paid.