Reporting/claiming home interest in a private mortgage

He may, but is not required to, send the amount of interest he is reporting for tax purposes in a letter so that payor can match with his own records and insure they both report the same figure.

IOW, a 1098 is not required in situations not a trade or business.

ChEAr$, Harlan Lunsford, EA n LA

You dont. There is a line on 1040A for non-1098 interest for mortgagee. They will have document contracts and payments to the IRS in an audit. This line is intended for multiple people on a mortgage contract, because only one SS# is reported to the IRS on a 1098. Its also intended for private mortgages such as in your case.

My recommendation is for the mortgage lender to download form 1098 from the IRS website

Fillout Form B. Make a copy of it. Keep one copy for yourself, and sendone copy to the person making the mortgage payments. Don't sendanything to the IRS as there will be penalties for not following thefont rules, etc. You can also just write a letter that has the sameinformation.

However, what kind of "group" is this? If the group is in the business of making loans, then you have to fill in part A of form 1098 and mail it to the IRS. You should use an online service to fill in part A, just because the font and other requirements. If the group is parents making a loan to their child, the approach in the above paragraph is fine.

But the real question is do you know how much to write in box 1 (mortgage interest)? If the loan is fixed, then computer the amortization schedule. The payments are fixed, but the amount that is interest decreases each year over the life of the loan. If the loan is interest only, then the computation is even easier. If the interest varies each month, then the computation becomes harder again. And if the mortgage payer makes extra principal payments, the computation becomes difficult again.