Form 1098

Form 1098 is the IRS tax document your mortgage lender or servicer sends you each January that reports how much mortgage interest you paid during the prior year. If you paid $600 or more in mortgage interest on a qualified loan, your lender must send you this form by January 31. The amount in Box 1 is what you use to claim the mortgage interest deduction on Schedule A of your federal tax return, subject to the applicable limits.

If you refinanced during the year, you may receive two separate Form 1098s, one from each lender that held your loan.

What Each Box on Form 1098 Reports

Several fields on the form matter for your tax return. Here are the ones you are most likely to use.

• Box 1: Total mortgage interest you paid during the year. This is the main number you report on Schedule A.
• Box 2: Outstanding mortgage principal as of January 1 of the tax year, or the origination date if the loan started during the year. Use this to verify your loan falls within the deductibility limits.
• Box 5: Mortgage insurance premiums paid. Deductibility varies depending on whether Congress has extended that provision for the applicable year.
• Box 6: Points paid at closing. Points paid on a new home purchase mortgage are generally fully deductible in the year paid. Points paid to refinance must be amortized over the life of the loan.

The Deduction Limits You Need to Know

Not all interest reported on Form 1098 is fully deductible. The Tax Cuts and Jobs Act of 2017 set the current limits, and they apply differently based on when your loan originated.

For loans originated after December 15, 2017, you can deduct interest on the first $750,000 of mortgage debt used to buy, build, or substantially improve your primary or secondary residence. For loans originated on or before December 15, 2017, the limit is $1,000,000. If your loan balance exceeds those thresholds, you can deduct interest only on the qualifying portion. You must itemize deductions on Schedule A to claim any mortgage interest deduction at all.

What to Do If Your Form 1098 Is Wrong

Contact your lender immediately if the interest amount does not match your own payment records. Lenders are required to issue corrected forms when errors are identified. If the corrected form arrives after you have already filed, you will need to amend your return using Form 1040-X.

Sources

• https://www.irs.gov/forms-pubs/about-form-1098
• https://www.irs.gov/publications/p936