Credit unions (i.e., “interest recipients”/lenders) who receive mortgage interest payments of $600 or more during a calendar year, must report those interest payments to both the member (i.e., payer of record making those payments) and to the IRS on “Form 1098, Mortgage Interest Statement.”

In 1994, the IRS issued a final regulation on reporting prepaid interest in the form of points paid on residential mortgages. Although this regulation took effect December 8, 1994, the reporting requirements do not apply to points received before January 1, 1995.

The IRS compares the 1098 provided by the credit union with the mortgage interest payments claimed as deductions on the member’s income tax return.

What is a mortgage?
For purposes of this reporting requirement, a mortgage is defined as an obligation (e.g., a loan) secured (all or in part) by real property. It is the credit union’s responsibility, as the interest recipient, to make the determination as to what a mortgage is. Note that real property includes a manufactured home, including certain mobile homes.

How do multiple mortgages effect credit unions?
The credit union must file a separate 1098 for each mortgage on which it received interest of $600 or more during a calendar year. If the credit union receives less than $600 of interest on a mortgage then no reporting is required.

What are mortgage interest payments?
According to Form 1098, the term mortgage interest includes “interest on any obligation secured by real property, including a home equity, line of credit, or credit card loan.”

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