How to enter mortgage interest received from personal loan? Should I send borrower form 1098?

Forum|Forum|6 years ago
June 1, 2019
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TurboTax Deluxe Windows

Best answer by Critter

No, you do not send a 1098. You can use an amortization schedule which you both should have or just communicate the amount between yourselves so that both of you report the same amount.

If you received interest from someone either as mortgage interest or other interest, enter it like you had received a 1099-INT and put the amount in Box 1. Enter it under….
Federal Taxes Tab
Wages & Income
Choose Explore on my own or I'll choose what to work on (if it comes up)
Interest and Dividends
Interest on 1099INT - Click the Start or Update button

ibjoeAuthor

Employee

Specifically, I loaned my relative to buy a house, they pay me principal and interest every month. I understand I don't need to send them form 1098, because this is a personal loan, not "in the course of (my) trade or business". I think I should send them 1098 anyway, because that may be easiest way for us both. Where to claim that interest income in TurboTax Deluxe? Thanks.

CritterAnswer

Employee

No, you do not send a 1098. You can use an amortization schedule which you both should have or just communicate the amount between yourselves so that both of you report the same amount.

ibjoeAuthor

Employee

Thank you 🙂

Critter

Employee

jpinter has a point .... so let me add to my answer.

If you are not in the business of loaning money like a bank then you do not need to send the payer a 1098 per the IRS regs on that subject. Instead the payer will report the mortgage interest paid by entering the name, address & tax number of who they pay on the Sch A and the holder of the mortgage will report the name , address & tax number of the payer on the Sch B so they cross reference each other.

See the screen shots ...

ibjoeAuthor

Employee

Thank you very much Critter#2 for the detailed answer and screen shots! Very helpful. 🙂

FAA1

I understand that it is not necessary to give the payee a 1098, but is this a Capital Gain asset for me under Rev. Rule 64=162 since I am reporting the interest and principal pay back over 25 years?

mglauner

An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. You can read more about installment sales here.

You can report part of your gain when you receive each payment, rather than all of your gain in the year of the sale.

Here’s how to report one in TurboTax:

Open your return in TurboTax
In the search box, search for installment sales and select the Jump to link
Check the box next to Sales of real estate, cars, or anything else for which you receive payments over two or more tax years (installment sales). Select Continue
Answer Yes to Do you want to report an installment sale?
Follow the instructions to enter your sale details

Here's more info on Form 6562.

@FAA1