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504 Q&A: 1098 Mortgage Interest Statements

Apr 2012

Q1- It is tax time and clients or their CPAs are requesting interest payment statements and loan balances on the Small Business Administration (SBA) portion of their 504 loan? Where is the Form 1098?

A1 - Most borrowers and/or their CPAs are looking for 1098 interest statements this time of year as evidence of the interest paid on their various mortgage loans. Every certified development company (CDC) receives a full reporting from Colson Services Corporation for its portfolio and typically has the information available no later than Jan. 31. Per IRS rules, a 1098, Mortgage Interest Statement, is used to report mortgage interest of $600 or more received by (the lender) from an individual, including a sole proprietor. The $600 threshold applies separately to each mortgage; thus, the lender files a separate Form 1098 for each mortgage as noted above.

Q2- Okay, I have read the above, but still don't have a 1098. Why not?

A2 - A lender is not required to file Form 1098s for interest on a mortgage received from a corporation, partnership, trust, estate, association or company (other than a sole proprietor) even if an individual is a co-borrower and all the trustees, beneficiaries, partners, members or shareholders of the payer of record are individuals. Also, a 1098 is only for reporting interest paid on a mortgage and mortgage is defined as any obligation secured by real property. So, if you have an equipment loan, you also would not receive a 1098.

Q3- Now that I understand the IRS definitions, and I know I will not receive a 1098, how do I obtain the interest and year-end balance information required to complete my books?

A3 - Each CDC probably operates a little differently in this area, but at Florida First Capital, all you have to do is contact the Loan Administration (Servicing) area at the Tallahassee headquarters and a loan servicing officer can provide a standardized form with the information you need. This is because Colson Services Corporation and the SBA have agreed that every borrower should have access to a 1098-like form, so regardless of reporting requirements, such a form is available on every 504 loan.

Q4- If I haven't received my Form 1098, what should I do?

A4 - Just contact the Loan Administration (Servicing) area at the Tallahassee headquarters at 850.681.3601 or toll-free at 888.320.5504 and one of our professional loan servicing officers will be able to provide you with a fax or email of the 1098 form.

If you have a question you'd like our SBA 504 loan experts to answer, email us at info@ffcfc.com or call 888.320.5504. Click here for an FFCFC staff directory.