Is Your Institution Under-Reporting Loans on Form 1098?
Right now most financial institutions are working on finalizing their Form 1098s, which are due to borrowers by January 31, 2018. Based on questions we have received from some institutions, we know there can be confusion about the types of loans that must be reported.
The form instructions define a mortgage as “any obligation secured by real property.” Real property is land and generally anything built on it, growing on it, or attached to it.
This is a much broader definition than the traditional “home mortgage” many lenders think of when considering the Form 1098. It can include business property or agricultural land as well as residential property.
The only exceptions for reporting relate to the type of borrower. Financial institutions are not required to provide Form 1098s to:
- Companies other than sole proprietors
So if you make loans to individuals that are secured by real estate, regardless of the type of real estate, you should be reporting those loans on Form 1098 if you receive $600 or more in interest during the year.
The address or description of the property should also be reported in box 8 to help borrowers identify the specific property that the form relates to.
For additional assistance with Form 1098 or other information reporting, please contact a member of the CLA Financial Institution team.