You enter mortgage interest received just AS IF you had received a form 1099-INT from a bank.
In TurboTax, you can enter your form 1099-INT by following these steps:
Why is there a separate prompt for investment gains and losses that were not reported on a 1099-B, but not a similar prompt for interest not reported on 1099-INT? Also, seller-financed mortgages are way down the list, but could possibly handle private mortgage entry? (Idea being there is private interest, not reported on a 1099, but the mortgage holder was not a property seller, at all?)
Use the seller-financed mortgage section even if you did not sell the property.
I see 2 very different answers here for reporting interest from a private mortgage when you are not the seller:
1- Just report it as if there is a 1099-INT (though there isn't one)
2- Report it as a seller-financed mortgage, even if you are not the seller (which seems inaccurate)
Which is the best method for this quite common situation where a mortgage (loan secured by real property and recorded a such) is held by a third party such as a parent or relative or business associate, but not by a bank, or by the seller of the property?
Further clarification much appreciated!
Use option 2 since you must report the name/address/SS# of the payer since you are holding a mortgage. The payer must report YOUR name/address/SS# on their Sch A if they want to deduct the mortgage interest they are paying you. Doing this cross references the payments from them to you for the IRS.
Use option 1 only if you are holding a loan that is NOT for a mortgage where you are holding the paper/lien.
Turbo Tax 2024 is not allowing me to e-file my return without providing the social security number for a private payer of mortgage interest that I have appropriately declared as income. At this point, the payer does not wish to provide me with his SS#. Any suggestions, other than mailing the return without the SS#?
The lender has to give you his tax ID (SSN or EIN), otherwise you cannot claim the interest.
The IRS will check the interest you paid against the interest income that the private lender received to see if they match.
I'm the lender. The payer is not giving me his SS#. (I suspect that he is taking the standard deduction and not deducting the mortgage interest that he is paying me.)
Even if the payer is claiming the Standard Deduction, he can still report the amount of Mortgage Interest he paid on his tax return. It will show on Schedule A, even if Schedule A is not filed. It's possible he does not have an SSN, but an ITIN, or does not file a tax return?
Perhaps he doesn't know how much of his payment is interest and principal, or does he have an amortization schedule that outlines those amounts for him?
If so, possibly you can convince him to give his SSN if you tell him you can't Efile your return without it. He may get credit on his state return for reporting the interest he paid. If you can't get his SSN from any other sources, you will need to mail your return, properly reporting the income.
Here's more info on Unable to Obtain SSN from Payer.
Option 2 (using the Seller-Financed Mortage Interest Statement) still has a problem.
We held a mortgage on our son's house, which he did not buy from us. This is similar to what others have described. This year he sold that house and bought a different one. We are not involved in the financing of the new house, but we received interest on the old one.
The problem is this: the statement in TurboTax assumes that the payer's address is the property address. In this case that is not true.
The actual IRS 1098 which we have used in previous years (not using TurboTax) has places for both addresses. I tried filling out the one it TurboTax, but it seems to assume that we paid the interest, which is the opposite of the truth.
Suggestion to Intuit: Allow us to use the 1098 from, but add a checkbox for whether the amounts are paid or received. This seems like an easy way to collect all of the right information and put the results on the right form.
The statement in TurboTax, Schedule B for Seller Financed Mortgage Interest Statement doesn't say "Address of the Property," it is just the address of the payer, your son. The Option 2 method will result in you correctly reporting the interest you received.