Bought Owner Financed Property - no 1098

9 Replies

We bought commercial property last year and the owner financed 90% of the purchase. They didn’t issue us a 1098 for interest paid. Can we still claim the interest? 

Thank you!

@Shea S.

This is common with owner financing.

Usually, you just report the interest and you're required to report the information of the recipient: name, identifying number, and address.  The identifying number is usually the social security number or an EIN. If you don't show the required info, you might be fined a penalty.

@Shea S.

The seller may not be required to give you a 1098. You, on the other hand, are not required to report the seller's information to the IRS. (@Christopher Phillips is confusing this with another situation: when you owner-finance a property to a homeowner.)

You're absolutely entitled to the deduction, no extra hassle for you. But very important: make sure to report it as "other interest" and NOT as "mortgage interest." Unless you enjoy dealing with the IRS letters.

I’m not confusing it.

Buyer with seller financing likely won’t receive a 1098 from the seller carrying the note.

@Michael Plaks

IRS Publication 936 page 8.

Deduct home mortgage interest that wasn't reported to you on Form 1098 on Schedule A (Form 1040), line 11. If you paid home mort- gage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11.

@Christopher Phillips - you're looking at instructions regarding personal residence, while our conversation is about commercial investment property

So I have 3 different owner financed properties I bought in 2017, all from different sellers, and none of them issued me a 1098.  These are all residential rentals.  Is that fine that I didn't get one and just report as "other interest" on my taxes for each? I don't have to report any of the sellers info right?

I spoke to my accountant and he stated that I do not need to report the seller’s information. He also said it will be reported under other interest. I suggest if you read this, you speak to your accountant for clarification and confirmation. Thank you everyone for the help. 

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here