Saturday, February 18, 2017

IRS is Getting More Info About Your Home Mortgage

Below is a copy of the 2017 Form 1098:

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The items with the green arrows are new - previously, the IRS did not obtain this information from the mortgage lender. Key items now being disclosed include the principal balance at the beginning of the year, the origination date, and the address of the home securing the loan.

This information will allow the IRS computers and personnel to make some judgments on whether a mortgage interest deduction was properly taken on an income tax return. Without this information, the IRS would have had to audit or otherwise inquire to obtain relevant information about the mortgage. This information will help the IRS determine whether deducted mortgage interest is within the $1 million limit on home acquisition debt and $100,000 of home equity debt, and whether the mortgage is on a permitted residence of the taxpayer.

As an aside, this is a small demonstration of how the existence of an income tax entitles the government to broad information regarding its citizens - information for which there would otherwise be no compelling justification for it to demand.

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