Form 1098 Mortgage Interest Explained — What Landlords Need

TL;DR: Form 1098 is the annual statement your lender sends showing how much mortgage interest you paid during the year — that's Box 1, and it's usually the largest single deduction on Schedule E. Box 6 shows points paid at closing (if you refinanced or bought that year), and Box 5 shows property tax paid from escrow if the lender handles that. Confirm the address and account number match your records — a mismatch can slow down IRS processing or flag a review.

_Last reviewed: July 2026 · 6 min read_

You open the mailbox in late January and find a thin white envelope from your mortgage servicer. Inside: Form 1098, "Mortgage Interest Statement." It looks simple — a handful of boxes, most of them empty — but those few numbers matter. The IRS already has a copy, and the figures in Box 1 and Box 5 drive two of the largest deductions rental-property owners claim every year.

Okoniq Property Hub keeps a digital folder for every property, so you can drop the PDF copy of each 1098 alongside your year-end bank statements and have everything in one place when your CPA asks for it.

What does Form 1098 actually report?

Form 1098 is an information return. Your lender (or mortgage servicer) files it with the IRS and sends you a copy. It reports payments you made that year — specifically, payments the lender believes may be tax-deductible. The IRS uses the form to cross-check your Schedule E (or Schedule A, if it's your personal residence) and confirm you're not inventing numbers.

You'll receive a separate 1098 for each mortgage. If you have three rental properties with three different loans, expect three forms. If you refinanced mid-year, you might get two forms for the same property — one from the old servicer (covering January through the payoff date) and one from the new servicer (covering the rest of the year). Add those figures together when you prepare your return.

The form is required when a lender collects at least a threshold amount of interest from an individual during the calendar year. The lender reports what it received, not what you think you paid — if you mailed a check on December 30 but the servicer didn't post it until January 2, that payment lands on next year's 1098.

What is Box 1 — mortgage interest paid?

Box 1 is labeled "Mortgage interest received from payer(s)/borrower(s)." It's the total interest portion of your monthly payments for that calendar year. On a rental property, this is almost always your largest deduction, often larger than property tax, insurance, and repairs combined.

If the loan is on a rental property, you report Box 1 on Schedule E, line 13 ("Mortgage interest paid to banks, etc."). If the loan is on your personal residence and you itemize, it goes on Schedule A instead. The two schedules don't mix — a single 1098 can't split between them. If you converted a personal home to a rental mid-year, talk to your CPA about how to allocate the interest; the form itself won't show that split.

Box 1 does not include principal, escrow deposits, or late fees. It's only the interest. You can verify it roughly by reviewing your monthly statements — most servicers break down each payment into principal, interest, escrow, and fees. Add up the interest column for January through December and it should match Box 1 within a few dollars. A small difference is normal if a payment posted in a different month than you sent it.

For more on how the mortgage interest deduction works in 2026 — including the acquisition-debt limit and the difference between first and second homes — see that standalone guide.

What is Box 6 — points paid on purchase or refinance?

Box 6, "Points paid on purchase of principal residence," appears only in the year you closed on a new loan or refinanced an existing one. "Points" (also called loan origination fees or discount points) are prepaid interest — you pay a lump sum at closing to reduce the interest rate over the life of the loan.

On a primary residence purchase, points are often deductible in full in the year paid, provided several conditions are met (the points were calculated as a percentage of the loan, paid directly at closing, customary in your area, and the loan was used to buy or build your main home). Box 6 will show that amount.

On a refinance or rental property purchase, the rules are stricter. Points are usually deductible over the life of the loan — divide Box 6 by the number of months in the loan term to get the monthly deduction, then multiply by 12 for the annual figure. If you refinance again or pay off the loan early, you deduct the remaining unamortized points in that year.

Not every lender fills Box 6 even when points were paid. Check your closing disclosure (the five-page form from the title company) under "Loan Costs — Origination Charges." If you see an origination fee or discount points there but Box 6 is blank, bring the closing disclosure to your CPA — the deduction still exists, the lender just didn't report it on the 1098.

What is Box 5 — property tax paid from escrow?

Box 5, "Mortgage insurance premiums," was relabeled in recent years but is still printed that way on some forms. What you're looking for is the property tax figure — many lenders now include it on a separate line or in Box 10 ("Other"). If your monthly payment includes an escrow deposit for property tax, and the lender actually paid the county or city on your behalf during that calendar year, the amount paid appears here.

This is the real property tax paid, not the amount you deposited into escrow. Escrow accounts collect your money monthly and disburse it once or twice a year when the tax bill comes due. The 1098 reports the year the lender sent the check, not the year you funded the account. If your county bills in arrears (common in many states), the payment on the 1098 may be for the prior tax year — that's correct. You deduct taxes in the year paid, not the year assessed.

If Box 5 (or Box 10) is blank, either your loan doesn't escrow for taxes or the lender didn't make a payment that year. Check your loan setup. If you pay property tax directly to the county, you won't see it on the 1098 — keep your county receipt and report it on Schedule E anyway. The deduction isn't limited to what the lender reports.

For homeowners who've lived in the same house for decades and are considering a sale, remember that property tax is a carrying cost, not part of your cost basis. The stepped-up basis or Section 121 exclusion rules won't offset ongoing property tax deductions.

Why do the property address and account number matter?

Boxes 8, 9, and 11 show the property address, the number of mortgaged properties securing the loan (usually "1"), and your loan account number. These identifiers link the form to your return. The IRS matches the property address on your 1098 to the address on your Schedule E. A typo — "Stret" instead of "Street," or an old address if the servicer's records weren't updated — can trigger a notice asking you to explain the discrepancy.

Check the address before you file. If it's wrong, call the servicer and ask for a corrected 1098-C (yes, the correction form shares a letter with the vehicle-donation form — different purpose, same suffix). Most servicers will issue a corrected form within two weeks. If you're filing before the correction arrives, attach a note to your return explaining the address on the 1098 refers to [correct address] and provide the loan number.

The account number in Box 11 helps if you have multiple loans with the same lender. It also helps your CPA confirm they're looking at the right form if you refinanced mid-year and received two 1098s. Write the account number on the outside of the envelope or the file name when you save the PDF — "1098_2025_account_ending_4321.pdf" is easier to track than "mortgage_statement.pdf."

Should I keep every Form 1098, and for how long?

Yes, and longer than you think. The IRS generally has three years from the due date of your return to audit it, but that clock extends to six years if the IRS believes you underreported income by more than a threshold percentage. For real property, keep the 1098 — and the closing disclosure from the year you bought or refinanced — until you sell the property, then keep everything for an additional seven years.

Here's why: when you sell, you calculate gain by subtracting your adjusted cost basis from the sale price. Cost basis includes the purchase price, but not the mortgage interest you deducted over the years. If the IRS questions your basis calculation, you'll need the purchase records. If they question whether you correctly deducted the mortgage interest each year, the 1098s are your evidence. A missing form from year three of a ten-year hold can force you to reconstruct that year's return, and reconstruction rarely ends quickly.

Store the 1098 alongside the corresponding year's tax return, Schedule E, and bank statements. Okoniq keeps a property-level folder for each rental; drop the PDF in the same folder as your repair receipts and mileage logs so everything is in one place when you need it. Paper copies fade — scan them if you haven't already.

For rental properties that generate passive losses, the carryforward can stretch ten or fifteen years. You'll need every year's 1098 to prove the losses were legitimate if the IRS audits the year you finally use them.

FAQ

Do I always receive a Form 1098 if I have a mortgage?

You receive a 1098 if your lender collected a reportable amount of mortgage interest from you during that calendar year. The threshold is statutory and applies to individual borrowers. If your loan is interest-only, or if you made only a few payments before the year ended, you may not receive a form — but you still deduct the interest you paid, using your own records.

What if Box 1 on the 1098 is less than what my December statement shows?

Box 1 reports interest your lender received during the calendar year, by posted date. If you mailed your December payment on December 28 but the servicer posted it on January 3, that interest appears on next year's 1098. Compare the 1098 to a year-end payoff statement or a line-by-line export of all posted payments — those will reconcile. Deduct the amount on the 1098, not the amount you think you sent.

Can I deduct mortgage interest if I lost the 1098 or the lender never sent one?

Yes. The 1098 is a reporting convenience, not the source of the deduction. If you have bank statements or a payment history from the servicer showing how much interest you paid, use that figure on Schedule E. Attach a note to your return explaining why no 1098 is attached (lost, lender didn't issue one, etc.). The IRS may ask for proof later, so keep the statements.

Does the 1098 show mortgage insurance or PMI?

It used to — Box 5 was originally "Mortgage insurance premiums" — but many lenders now use Box 5 for property tax and report PMI separately or not at all. If your loan requires mortgage insurance and you're looking to deduct it, check your HUD-1 or closing disclosure for the annual premium, or call the servicer. PMI deductibility rules are narrow and have changed several times; confirm current rules on IRS.gov before claiming it.

What do I do if the property address on the 1098 is wrong?

Call the servicer immediately and request a corrected Form 1098-C. Most will issue one within ten business days. If you're filing before the correction arrives, attach a signed statement to your return explaining that the 1098 lists [wrong address] but refers to the property at [correct address], and include the loan account number. The IRS will match it manually. A wrong address by itself won't disallow the deduction, but it will slow processing.

<div class="glass rounded-2xl p-5 mt-7 max-w-4xl border border-red-400/30 bg-red-500/5"> <div class="flex items-start gap-3"> <span class="text-2xl flex-shrink-0">⚠️</span> <div class="flex-1 min-w-0"> <p class="text-red-200 text-sm font-bold">Not tax advice</p> <p class="text-slate-300 text-xs mt-1 leading-relaxed"> This post assumed a simple fact pattern — one property, one loan, standard monthly payments. It does not account for interest tracing rules if you used the loan proceeds for something other than acquiring or improving the property, or for the allocation rules if you converted a home from personal use to rental mid-year. Tax rules change and depend on your specific situation. Talk to a licensed CPA before acting on anything here, and confirm current figures on IRS.gov. </p> </div> </div> </div>