Discussion:Identification of private lender on tax return
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Discussion Forum Index --> Advanced Tax Questions --> Identification of private lender on tax return
Discussion Forum Index --> Tax Questions --> Identification of private lender on tax return
| 23 March 2009 | |
| Can't find the answer to this right off the top of my head, so need some help. I have a client who has financed the purchase of his home through a number(5) of private parties. They do not want to give their SS numbers or any other identification. Ha, ha, I think I know whats going on here, but isn't there a requirement for this information on the return if the T/P wants to be able to deduct it? Like perhaps, the IRS' matching program? | |
| 23 March 2009 | |
| Deback. Thanks, but I think I am going to need Chapter and Verse to reply to the lender, who says that he has been doing this for years! | |
| 25 March 2009 | |
| Futenma. Thanks, however, that reference states that if any taxpayer claims a deduction for qualified residence interest of their return they shall include the TIN, name and address of the lender. Likewise, in the same section, the seller-providing lender is required to provide TIN, name and address. However, the instructions for the Form 1098 state that if the lender is not in the business of lending money, or is not the seller of the property, they are not required to provide said information. My situation is with private lenders. My tax program will not let me past not providing the information. So? Ideas? | |
| 25 March 2009 | |
| 6109 only requires that you report the TIN if it's the person you bought the residence from, "seller provided financing." From your 1st post, I'm not sure if your client is even required to report the TIN's. But if he is, then 6109(h)(3) requires both of them to provide the other his TIN. I agree that the 1098 is not required, but that really isn't the issue. | |
| 25 March 2009 | |
| Futenma. Right. I don't think that that is the issue either. The issue, I think, is that, must the lender provide that information or not? The Computer says yes, but then who believes the computer. I do think it strange that someone could say that they borrowed money from someone, and not identify that source. Does this not fly in the face of the IRS "matching program"? And if that is the case then how would anyone know that the interest paid was bona fide? | |
| 26 March 2009 | |
| People may have reasons other than trying to hide income for not providing their ss number to the borrower. An individual mortgage lender would have to be pretty dumb not to report interest income when he knows that the payer is reporting it as Mortgage Interest not on a 1098. From time to time over the years I have been a private mortgage lender and you can be sure I have always reported that interest income, but I never disclosed my ss# to the borrower. I list it on Schedule B as interest received from (name of borrower). When the borrower was an individual I also made sure I had a mortgage deed from the borrower and also had that deed recorded as that is key to that borrower's abiliy to deduct. | |
| 26 March 2009 | |
| Did these people make personal loans to the buyer or are they owners of the property? Is the buyer, perhaps, purchasing existing shares of an inherited property of which the buyer is one of the part owners? There may be even more of a problem if these loaners are relatives that have a stake in the property.
What do you think is going on here? I wouldn't do anything until the client explained why the "investors" refuse to disclose their info. And whether or not they choose to the client needs to report it on the return. I am sure the client can, at least, provide you with names, addresses, phone numbers.taxea | |
| 26 March 2009 | |
| Jake and Taxea. Thanks. No, the lenders do not have any stake in the property as previous owners nor are they related in any way to the T/P. They are just simply good friends with money and are willing to lend it to the T/P. However, Jake and several of my colleagues have a good point in that I should check the mortgage deed to see if they are included. Good point! Also, I want to know why they don't want to have their IDs disclosed. If not on the deed, then, no deduction, I presume? | |
| 26 March 2009 | |
| The why's and wherefore's of why the lender do not wish to disclose the required information is not the issue, nor is it really pertinent.
What is pertinent is what is required of the buyer wishing to deduct. The form and the tax program states that it needs the soc security number if it is financed by the seller of the home. I would just list the interest under mortgage interest not reported on a 1098. The people lending the money can do what their accountant tells them to do. | |
| 27 March 2009 | |
| Fsteincpa is absolutely correct...it doesn't matter what the lenders want/don't want...it is what the tax rules tell you to do if the client wants to claim it. taxea | |
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