The 1098 form reports mortgage interest and property taxes you paid during the year

The Form 1098 is a document your mortgage lender sends you each January showing how much mortgage interest and property taxes you paid in the previous year. It exists because these two payments can reduce your federal income tax if you itemize deductions instead of taking the standard deduction. The form itself does not reduce your taxes — it straightforward reports the numbers so you can decide whether to claim them.

You receive a 1098 only if you have a mortgage loan on a property. Renters do not receive one. If you own your home outright with no loan, your lender will not send one either. The form comes from the financial institution that holds your mortgage note, not from your local tax assessor or county.

The 1098 is one of several forms that report deductible expenses. It works alongside your property tax bill and your own records to help you calculate whether itemizing saves you money compared to the standard deduction.

Key Takeaways

  • Form 1098 reports mortgage interest and property taxes paid during the year, which you can deduct only if you itemize rather than take the standard deduction.
  • Your lender mails the 1098 by January 31 each year, and you receive a copy for your records and one for the IRS.
  • The form shows interest paid, not principal paid, because only interest is tax-deductible for most borrowers.
  • You must have a mortgage loan to receive a 1098; homeowners without a loan or renters will not receive one.
  • The numbers on your 1098 may not match your actual tax bill or interest paid if you refinanced, paid off the loan, or had an escrow shortage or overage.

What appears on the 1098 and why each box matters

The 1098 has several numbered boxes, but most homeowners focus on two: Box 1 (mortgage interest paid) and Box 5 (property taxes paid). Box 1 shows the total interest you paid to the lender during the year. This is the amount you can deduct if you itemize. Box 5 shows property taxes that the lender paid on your behalf from your escrow account — the account where you deposit money each month to cover taxes and insurance.

Box 2 shows points paid in the current year. Points are an upfront fee you pay to reduce your interest rate; they are deductible, but the rules for when and how to deduct them are complex and depend on whether you paid them yourself or the seller paid them as part of the sale.

Box 4 shows the outstanding principal balance on your loan as of January 1 of the year you file. This number is informational and does not affect your tax return directly, but it can matter if you are tracking your loan payoff or refinancing.

Boxes 6 through 9 contain information about mortgage insurance premiums, refunds of overpaid interest or taxes, and other less common items. Most homeowners can ignore these unless they explore to your specific situation.

Why the 1098 amount might not match what you actually paid

A common source of confusion is that the interest shown on your 1098 may differ from the interest you calculated yourself or from what your loan statement shows. Several reasons explain this gap.

If you refinanced during the year, you may have paid interest to two different lenders. The 1098 from your original lender covers only the months you were with them; your new lender will send a separate 1098 for the months after the refinance. You add both together when you file.

If your escrow account had a shortage or overage, your lender may have adjusted the amount of property tax they paid on your behalf. The 1098 reports what they actually paid, not what your property tax bill says you owe. Similarly, if you made an extra principal payment or paid off the loan early, the interest calculation changes.

Some lenders also report interest differently depending on your loan type. If you have a construction loan, home equity line of credit, or other non-standard mortgage, the rules for what gets reported can vary.

How to use the 1098 when you file your taxes

You do not send the 1098 to the IRS with your return. Instead, you use the numbers from it to fill out Schedule A, the form where you list itemized deductions. You enter the mortgage interest from Box 1 and the property taxes from Box 5 into the appropriate lines on Schedule A.

Before you itemize, you need to know whether itemizing will save you money. Compare the total of your itemized deductions (mortgage interest, property taxes, state and local taxes up to $10,000, charitable donations, and medical expenses) against the standard deduction for your filing status. If your itemized total is higher, you itemize. If not, you take the standard deduction and ignore the 1098 numbers.

The standard deduction changes each year and depends on your age and filing status. For 2024, it ranges from $14,600 for a single filer under 65 to $29,200 for a married couple filing jointly. Many homeowners with moderate mortgage balances find that the standard deduction is larger than their itemized deductions, so they do not benefit from the 1098 at all.

When you might not receive a 1098

If you paid off your mortgage during the year, your lender will still send you a 1098 for the months you were a borrower. It will show the interest and taxes paid up to the payoff date.

If your mortgage interest for the year was less than $600, your lender may not be required to send a 1098, though many do anyway. Check your loan statement or contact your lender if you do not receive one by January 31.

If you are a renter, you will never receive a 1098. Rent payments are not tax-deductible for most renters, though some states and cities offer separate renter tax credits that work differently.

If you own a property but have no mortgage — you paid cash or paid it off completely — you will not receive a 1098. You may still owe property taxes, which you can deduct on Schedule A, but you will report those using your property tax bill, not a 1098.

The difference between the 1098 and your actual mortgage statement

Your monthly mortgage statement and your annual 1098 serve different purposes and may show different numbers. Your statement shows the principal and interest you paid that month, plus escrow deposits. The 1098 shows only the interest and property taxes for the entire year, and it comes from the lender's accounting system rather than your payment history.

If you made extra payments toward principal, your statement will reflect that, but the 1098 will not — it only reports interest. If you paid property taxes directly to your county instead of through escrow, those payments may not appear on the 1098 at all, though you can still deduct them using your tax bill.

For these reasons, do not assume the 1098 is wrong if it does not match your own calculations. Instead, review both documents side by side. If you still see a discrepancy, contact your lender to ask how they calculated the amount.

Frequently Asked Questions

Do I have to itemize if I receive a 1098?

No. The 1098 is informational. You choose to itemize only if your total itemized deductions exceed the standard deduction for your filing status. Many homeowners with smaller mortgages or lower property taxes find the standard deduction is larger and do not itemize at all.

What if my lender did not send me a 1098 by February?

Contact your lender directly. They are required to mail it by January 31. If you do not receive it by mid-February, ask them to resend it or provide a transcript of the interest and taxes paid. You can file your return without the 1098 if you have your loan statement, but having the official form is cleaner.

Can I deduct property taxes if I pay them directly to my county instead of through escrow?

Yes. You can deduct property taxes using your county tax bill or receipt, even if they do not appear on the 1098. The 1098 only reports taxes your lender paid from escrow. If you pay separately, keep your receipts and report the amount on Schedule A.

Does the 1098 mean I will get a tax refund?

No. The 1098 reports deductible expenses, but whether you receive a refund depends on your total income, all your deductions, and how much tax you already paid through withholding or estimated payments. A higher deduction may reduce your tax bill, but it does not may provide a refund.

What if I refinanced mid-year and have two 1098 forms?

Add the interest and property taxes from both forms together when you file. Each lender reports only the months you were their borrower. The total of both 1098s represents your full year of deductible interest and taxes.