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    Mortgage assistance

    I am finding the discussions on this subject long on questions and short on answers. The IRS's "safe harbor" discussion only adds to my confusion. So here's a specific case for a principal residence:

    Form 1098-MA shows 20,416 both in Box 1 and Box 2; nothing in Box 3.

    Form 1098 (Mortgage Interest Statement) shows 18,149 in Box 1 and 3000 in Box 4. Property taxes paid: 5453. Ending escrow balance: 1837. Principal balance is 330,616.

    I presume nothing is reportable as taxable income. But should any reduction be made to the deduction for mortgage interest or insurance premiums?
    Evan Appelman, EA

    #2
    Nothing is reportable, however

    ONLY the mortgage interest and property taxes that the T/P actually paid is deductible on Schedule A.

    Any part that they paid, may not be deduct.

    Hope that helps,
    Mike

    Comment


      #3
      Are you sure about taxes?

      From Pub. 936:

      "No other effect on taxes. Do not include these mortgage assistance payments in your income. Also, do not use these payments to reduce other deductions, such as real estate taxes."

      A similar question arises regarding mortgage insurance premiums.
      Evan Appelman, EA

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