Taxpayer and spouse both lost their jobs late in 2010, and found other employment in 2011. During this time, they fell hopelessly behind on making their mortgage payments.
After securing employment in 2011, mortgage bank restructured loan such that all payments were brought out-of-arrears and a new payment schedule implemented for the future which the clients have kept without further delinquency.
At the time of the restructuring, there was $6000 in total payments which were delinquent, including $5000 in unpaid interest. The $5000 in unpaid interest was wrapped into the restructured loan.
There are all manner of regulations about interest has to be "paid" to be deductible" but the same holds true for medical expenses and other items which are "paid" by credit cards or new loans. I believe the $5000 would be deemed to have been paid by virtue of wrapping it into the new loan.
However, the 1098 from the mortgage bank does not include the $5000. Your opinions???
After securing employment in 2011, mortgage bank restructured loan such that all payments were brought out-of-arrears and a new payment schedule implemented for the future which the clients have kept without further delinquency.
At the time of the restructuring, there was $6000 in total payments which were delinquent, including $5000 in unpaid interest. The $5000 in unpaid interest was wrapped into the restructured loan.
There are all manner of regulations about interest has to be "paid" to be deductible" but the same holds true for medical expenses and other items which are "paid" by credit cards or new loans. I believe the $5000 would be deemed to have been paid by virtue of wrapping it into the new loan.
However, the 1098 from the mortgage bank does not include the $5000. Your opinions???