Mortgage Interest Deduction for a Coop

[ZorbaWL]

NOTE:  This not a question on standard home mortgage interest.

I have an apartment in a coop in NYC.  The coop has 900+ units.  Every person who owns an apartment is an owner of the coop.  There is a mortgage on the coop building.  Every February, all owners of the coop receive a letter from a CPA firm detailing how much mortgage interest the owners can deduct from their personal income tax.  The letter contains only the interest amount.  There is no information on origination date, mortgage amount or any other numbers that we see on a regular 1098 form, since this is not a home mortgage.  This is a mortgage for a corporation (the coop), where the interest is distributed among the owners of the corporation.

How will I be able to deduct the mortgage interest on TurboTax Premier, desktop version?

As there are many coops in NYC, and probably many of them use TurboTax (maybe not…they may use tax accounts), there must be a way I can enter the interest in TurboTax.

I used to have a tax accountant doing my taxes.  He was able to enter the interest on Schedule A, box 8b.  However, when I do this, TurboTax does not include the interest in the calculation.  (I know because I would enter a fake 1098 in the step-by-step section using the same mortgage interest and TurboTax will decrease my taxes).

[KrisD15]

Perhaps the owners of the other co-ops get a 1098 from the CPA firm that handles their bookkeeping. 

You could enter a "mock" 1098, but you would need to know your share of the loan balance. 

If the CPA Firm was able to calculate your share of the interest, they should be able to also tell you what your share of the loan balance is.

You could then enter as a 1098 into the TurboTax program and indicate that the 1098 was issued in the name of someone else, which would be the housing corporation.

According to the IRS:

"Cooperative apartment owner. If you own a cooperative apartment, you must reduce your home mortgage interest deduction by your share of any cash portion of a patronage dividend that the cooperative receives. The patronage dividend is a partial refund to the cooperative housing corporation of mortgage interest if paid in a prior year.

If you receive a Form 1098 from the cooperative housing corporation, the form should show only the amount you can deduct.

Limits on deduction. To figure how the limits discussed in Part II apply to you, treat your share of the cooperative's debt as debt incurred by you. The cooperative should determine your share of its grandfathered debt, and its home acquisition debt. (Your share of each of these types of debt is equal to the average balance of each debt multiplied by the fraction just given.) After your share of the average balance of each type of debt is determined, you include it with the average balance of that type of debt secured by your stock.

Form 1098. The cooperative should give you a Form 1098 showing your share of the interest. Use the rules in this publication to determine your deductible mortgage interest."

[ZorbaWL]

The CPA firm actually does not calculate the interest for every unit in the coop.  They send out a standard letter to every owner of the coop.  Each owner has a number of shares of the coop, similar to stocks in a company.  The shares are determined by the size of the apartment and its location (higher floors has more shares).  The standard CPA letter provides the interest for 1 share.  Then each owner can multiply the number shares for the apartment by this number to get the interest.  No one in the coop gets a 1098 form from the CPA firm.

I've used TaxSlayer in previous years and was able to enter the interest in their software.  However, I am unable to find where I can enter it in TurboTax.  Then, of course, the tax account was also able to do this in whatever software he was using.

[PatriciaV]

Yes, enter this home mortgage interest under the Form 1098 topic, even though you didn't receive a 1098. 

In TurboTax Premier, go to Federal Taxes >> Deductions & Credits >> I'll choose what I work on >> Your Home >>> Mortgage Interest... >> Start/Update.

1. On the page "Do any of these situations apply?" choose "Our names are not on the 1098."
2. Enter the Coop Name and Address.
3. Enter your portion of the mortgage interest, adjusted for any patronage dividends.
4. Enter your portion of the outstanding mortgage principal (or estimated).
5. Enter the mortgage origination date (or the date you moved in).
6. It is the most recent version of Form 1098, it's not a refinance, and you've used it exclusively for your primary home.

These entries will report the interest on Schedule A Line 8(b).

[ZorbaWL]

Thanks for the reply.  Unfortunately, the origination date and outstanding mortgage principal are not available.  Because this is a coop, not a single home mortgage, I share a portion of the mortgage interest for the whole building with 900+ members of the coop.  As far as I know the mortgage could be in the millions.  This is the reason for the CPA letter giving me my portion of the interest based on the number of shares I own.  The CPA letter is a standard letter providing the interest on a per share basis.  All coop members receive the same letter (the letter is actually posted on the coop website).  The letter actually states that it is to be used for personal deductions on our tax filing.  This similar letter has been used since 2008 when I purchased the coop, and I had no problem filing my taxes with it, except this year when I decided to try TurboTax.

I've tried all the options suggested by the expert community, including your suggested steps, I am unable to complete the entries for any of them due to the missing information.

[PatriciaV]

The outstanding mortgage balance and origination date are used to test if the interest is deductible. The mortgage limit is $750,000 ($375,000 if married filing separately). As long as you enter a number below that limit, your interest is deductible.

From a reasonableness standpoint, your share of the outstanding mortgage shouldn't be more than you paid for the coop apartment.

Use the date you joined the coop as the origination date.

Note that your entries for this calculation are not reported to the IRS. Only the amount on Schedule A and the name & address of the Coop are included with your filed tax return.

@ZorbaWL 

[ZorbaWL]

This is complicated.  When purchasing the coop (which is an apartment), I took out a mortgage.  This is like purchasing a home for which I do receive a 1098.  The mortgage amount is limited to the $750,000 as you mentioned.  At the same time, the corporation which owns the building for which there are 900+ coop units also has a mortgage which are in the multiple of millions.  The owners (which are the coop owners) of the corporation share this building mortgage. (The monthly maintenance fee includes payment for the building mortgage.)  Therefore, the interest is also shared among the owners.  This interest is also deductible based on the CPA letter.  As a result, there are potentially 2 mortgages for each coop owner: 1 for the coop unit itself, and 1 for the building.   The interest deduction I am having problems entering in TurboTax is the building's mortgage, not the coop unit.

Coop is very common is NYC.  This is the way they all work.

[AmyC]

Follow these steps:

1. Open to Federal tax deductions
2. Select add a lender
3. Enter Coop /mortgage name, continue
4. Select primary home
5. Select none of the above, continue
6. Since the CPA gave you the deductible amount, enter the mortgage interest,
7. enter $1 for the outstanding balance
8. Enter the date you joined the coop for the origination date.
9. any other information to enter and continue
10. Yes, secured by property of mine
11. No points
12. Most recent
13. Heloc, no
14. Exclusively on this home, yes

The mortgage covers al things but your share is yours and is related to your primary home and you are responsible. So the answers need to force the program to allow your sch A to show the correct mortgage interest for you and your home.

[HM43]

Hey @ZorbaWL any chance you figured this out? I'm in the same boat - no 1098, just the letter from the accountant with the mortgage interest and real estate tax per share. 

[AmyC]

You can enter the information as I stated in the steps above. You enter your share of the coop mortgage and property tax.

1. Open to federal deductions and credits
2. Select mortgage interest
3. Enter the coop name or the mortgage holder
4. Select either:
   1. my name is not on the 1098-T and enter the coop information  or 
   2. none of the above and skip entering coop info
5. Continue
6. Fill in your mortgage interest, etc as described above.

You will see your coop info in the summary and you get the deduction.

@HM43