Is a 1098 required on a lot loan?

Question:

Is a 1098 required on a lot loan? Most information I find says the interest is not tax deductible until construction of a home begins. Some times we know about construction, some times we do not.

Answer:

If the borrower is an individual and any portion of the collateral is real estate (read: dirt), the interest is reportable.

As you note, generally the interest on a lot loan would not be deductible, but the rules on reportability and deductibility do not mesh. For example, interest paid on a motor home may be deductible as a residence or vacation home, but it is not reportable.

For assurance, take a look at the 1098 instructions on the IRS Web Site: http://www.irs.ustreas.gov/forms_pubs/index.html

First published on BankersOnline.com 11/5/01