IRS form 1098 is a mortgage interest statement, according to Forbes. It is used to report mortgage interest and points of $600 or more paid to a lender for a mortgage in the course of the tax year.Continue Reading
A mortgage is a loan secured by a home, which can be a house, apartment, boat or similar property, explains Forbes. It must include living accommodations such as a sleeping space, toilet and cooking facilities. The mortgage holder only sends a 1098 form to borrowers whose property is considered "real property." Real property is defined by the IRS as land and generally anything built on it, growing on it, or attached to the land. So if a mortgage is not secured by real property, the lender does not have to issue a 1098 form.
When issued a 1098 form, the main thing taxpayers find useful is the information in Box 1, states Forbes. This box shows the taxpayer the amount of mortgage interest paid to their lender. If the homeowner meets the criteria, she can then deduct the sum shown in Box 1 on a Schedule A, which is used for itemizing deductions. Some homeowners are eligible to use points that allow them to pre-pay interest to improve the rate on their mortgage. These points are included in Box 2 and can be deducted in the year that they are paid, as long as the determining criteria is met. Box 4 is used by the lender to report information to the homeowner and is generally useful when preparing taxes.Learn more about Taxes