Requirements for 1098

[geekgirldany]

I want to double check the requirements for a 1098 mortgage interest statement.

Client A sold rental house and is financing it for the buyer. He was told by lawyer to send 1098 Mortgage Interest to buyer. My thoughts were always that if the person was not in the "business" of lending then the from is not required.

Client B, sold commercial building and financing for buyer. Over the course of 10 years, the buyer was sending my client a 1099-INT. I did not know this, I was reporting the buyer's information on Schedule B (name, address, ssn). The buyer is now saying that he should be receiving a 1098 Mortgage Interest statement. Again not in the business of lending.

In both cases, I do not believe one should be sent. That the IRS will match up on the individual's Schedule B what was paid and that would be enough for the buyer to deduct the interest. It can be traced.

Is that correct? On Client B, the buyer is insisting he gets one. Would there be any problems with doing so?

Thank you for any help.

[Lion]

From the Form 1098 instructions:

Not in the lending business.

If you receive mortgage interest of $600 or more in the course of your trade or business, you are subject to the requirement to file Form 1098, even if you are not in the business of lending money. For example, if you are a real estate developer and you provide financing to an individual to buy a home in your subdivision, and that home is security for the financing, you are subject to this reporting requirement.

However, if you are a physician not engaged in any other business and you lend money to an individual to buy your home, you are not subject to this reporting requirement because you did not receive the interest in the course of your trade or business as a physician.

[Roland Slugg]

Also from the F-1098 instructions:

File this form if you are engaged in a trade or business and, in the course of such trade or business, you receive from an individual $600 or more of mortgage interest on any one mortgage during the calendar year. You are not required to file this form if the interest is not received in the course of your trade or business. For example, you hold the mortgage on your former personal residence. The buyer makes mortgage payments to you. You are not required to file Form 1098.

I don't see how it could be any clearer or simpler than that.

[geekgirldany]

Thank you both for posting. I read that but I always want to double check... I guess I think when a lawyer says something has to be done he probably knows more than me... obviously not.

[CVTax]

Not required, BUT - I send one to the buyer of our former residence (we financed), just to avoid him reporting improper amounts. He has no clue what he pays in interest, except for the amortization schedule that he got during closing. That isn't even close anymore.