Question

How do we report grant money to bring mortgage current and 3 future months paid by cares act money given to state?

Forum|Forum|3 years ago
February 20, 2023
1 reply
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It was a HAF grant paid directly to Rocket Mortgage, can we deduct interest paid also?

TurboTax Deluxe Online

The COVID-19 pandemic is a qualified disaster within the meaning of § 139(c). A HAF payment is a qualified disaster relief payment within the meaning of § 139(b)(4). As a result, such payments are not included in the Homeowner's gross income.

IRS revenue procedure, Rev Proc 2021-47, also provides an optional safe harbor method homeowners may use compute their itemized deductions for mortgage interest and real property taxes when the homeowner has received, or benefited from, a HAF payment during the tax year. This safe harbor is necessary because a HAF payment may be used to pay a portion of a homeowner’s mortgage interest and/or real property taxes while the homeowner also paid a portion of those expenses with non-HAF funds.

Revenue Procedure 2021-47 details how to compute itemized deductions when receiving HAF Grants. See page 6.

IRS Guidance for Tax Treatment of HAF Grants.

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