Tax Forms to Provide More Mortgage Details
According to a recent article, “Feds Plan to Tinker with Mortgage Interest Reporting,” the IRS needs more information to determine who is and is not cheating on their mortgage interest deduction.
Currently, the IRS is having difficulty determining, for example, if the interest being deducted on a home-equity loan is correct. Under the present system, the IRS does not know if the home-equity line of credit exceeds $100,000, the maximum amount eligible for an interest deduction. Similarly, the maximum principal residence or second home loan eligible for an interest deduction is one million dollars and the IRS is unable to accurately monitor this.
The proposed fix is to modify Form 1098, which is sent to the IRS and the borrower by the company that services the mortgage. A number of items might be added, possibly creating problems for the mortgage servicer. Some of these could distinguish between acquisition, refinancing and home-equity loans. In addition, the property address and the beginning and ending loan balances would be included.