Never received a 1089, what should I do?
I financed a house back in 06'. It was Owner Financed (seller financed). I have never received a 1089 from the owner, even though I asked multiply times and he said he always sent it. I'm assuming that the Owner is not claiming the mortgage on his Taxes.
I have been claiming that I pay a mortgage on my taxes, even though I have never received a 1089.
Should I contact the IRS and tell them that the owner is not sending me a 1089 and that he might not be claiming it?
Or do I even need a 1089?
Thanks a head for any advise.
- ProfLv 77 years agoFavorite Answer
First of all, its a Form 1098 not 1089. You don't need a copy of the form to claim your interest deduction on your tax return. You do have to indicate to whom you paid the interest, and if it's an individual, you should provide full name and address. The deduction is in Schedule A, and if there is not enough space, add a blank page explaining that payments are to a private party. Be sure you claim only the interest and not the entire payment. And be sure you keep a complete record of each payment: canceled checks, or ACH bank withdrawals in your bank statements, or whatever other means you use to make the payment. It's a good idea to have a debt amortization table that shows each month's interest and principal payment and remaining balance. Any spreadsheet can be used to create one easily.
The IRS cross-checks the information you provide with the recipient's return, so you don't need to mention it. Since the seller is not providing the 1098, you can turn the tables on him and submit a form 1099-INT showing the amount of interest you paid him. then the IRS will definitely match the form with his tax return. You have to order the 1099-INT and a 1096 from the IRS. You can't download these forms because they are special multi-page forms.
ADDED Note to NA. You do not have to receive a 1098 to deduct your mortgage interest and anyone paying anyone else more than $600 a year may submit a form 1099 although individuals are not required to do so. Moreover, anyone who knows how can calculate the amount of interest paid on a debt. An amortization table is easy to construct with a spreadsheet or by hand and a simple calculator.
- ninasgrammaLv 77 years ago
It's Form 1098. An owner financer is not in the trade or business of issuing mortgages and he doesn't have to issue you a Form 1098.
Put your mortgage interest on your tax return. Include the name and tax id number of the person who is receiving the payments. In the case of owner financing, you are required to list the person receiving the payments.
Whether the seller reports the income or not does not disqualify you from claiming the deduction.
- troLv 77 years ago
I've got news for you, no one else has received a 1089 either
if you bought a seller financed home you should have had an amortization schedule included with the contract, showing the interest you paid on the mortgage
you would claim that on your Sch A, and you need his SSN to be able to enter it
he is required to report the interest he makes on the contract, if he has failed to do so he has a problem
if nothing else you can produce an amortization schedule yourself, there are sites that you can enter your note amount, the rate of interest and the number of years, this will give you the interest you can claim
- NALv 77 years ago
Banks issue 1098 forms. Individuals do not.
Banks or businesses that pay interest issue 1099-INT forms. Individuals do not issue the form unless the interest unless they pay it as part of a business (say if this was rental property) or the interest belongs to someone else (this is not your situation). It would inappropriate for you to guess at the amount of mortgage interest you paid and then try to issue your owner-financier a 1099-INT. (And shame on the first poster for even mentioning it!)
If the mortgage was recorded, you can claim the interest paid by doing the following. On the 1040, schedule A, line 11 (not line 10), you enter their name and SSN and the amount. You must also tell the owner-financier YOUR SSN as he will report the same money as income on his 1040, schedule B and MUST show your name and SSN on his tax form. Leaving off the SSNs is a $50 penalty for each of you. If the seller did NOT record the note, you cannot take a deduction at all (though it is still income to him). To find out, you ask him.
If you are single, you already get a $6100 standard deduction for 2013. Only the amount of schedule A that exceeds that $6100 can reduce your income tax bill. If your total is less than the standard deduction, you would get no benefit from itemizing.
So, you need to ask him for a copy of the amortization schedule (this shows how the amount you paid is split between interest and principal) for each year. You also ask him for his name and SSN and you give him yours. (I regularly tell sellers who do this financing to issue a formal letter each year with the totals so that the tax return information you file will match his.)
Edit to Prof. Our poster doesn't even know if the house secures the loan and probably has no idea how to check at the records building. If the loan was never recorded, he cannot deduct the interest.
While *anyone* can do an amortization schedule, I'm willing to bet the poster also doesn't know how and will just ballpark the number, creating an even bigger mess. If he tries to file the 1099-INTs for several years, he will get a late filing penalty....
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- BobbieLv 77 years ago
Form 1098, Mortgage Interest Statement
You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that:
Makes your ownership in a qualified home security for payment of the debt,
Provides, in case of default, that your home could satisfy the debt, and
Is recorded or is otherwise perfected under any state or local law that applies.
In other words, your mortgage is a secured debt if you put your home up as collateral to protect the interests of the lender. If you cannot pay the debt, your home can then serve as payment to the lender to satisfy (pay) the debt. In this publication, mortgage will refer to secured debt.
Publication 936 (2012), Home Mortgage Interest Deduction
Hope that you find the above enclosed information useful. 09/14/2013