Financial Glossary
Form 1098 (Mortgage Interest Statement)
Form 1098 is an information return that lenders use to report the amount of mortgage interest, and often points and mortgage insurance premiums, a borrower paid during the tax year. Lenders send it to both the borrower and the IRS when reportable interest crosses the reporting threshold. Borrowers use the figures to support a mortgage interest deduction when they itemize.
Problem & Application
Real estate investors and owners who carry mortgages on rental or short-term-rental properties rely on Form 1098 to substantiate deductible interest, often one of the largest expenses on a property. Interest tied to business or rental property is generally deducted against that activity rather than as a personal itemized deduction, so categorizing it correctly matters. Reconciling 1098 amounts to your books prevents both missed deductions and misclassified interest.
In Short
Form 1098 documents the mortgage interest you paid, and matching it correctly to personal versus rental use determines where and how you deduct it.