Woman doing taxes in her home

Update as of February 23, 2018: Congress decided to reinstate the tax provision on deductibility of mortgage insurance premiums retroactively for 2017 as part of the Bipartisan Budget Act of 2018, which was signed into law on February 9, 2018. As a result, we’re issuing corrected 1098 statements with the amount allocated to mortgage insurance premiums for 2017 in Box 5 if applicable. For more information on the tax implications of this, we recommend speaking with your tax professional.

Every year, Quicken Loans is required to report Form 1098, the Mortgage Interest Statement, to the Internal Revenue Service (IRS) for your mortgage and provide this statement to you. This statement assists homeowners in filing their own tax forms required by the IRS, particularly in helping to take advantage of home tax deductions.

Quicken Loans was obligated to provide our clients with their statement by January 31, 2018. Following the form’s 2017 instructions, Quicken Loans left Box 5 for mortgage insurance premiums blank at this time. However, on February 9, 2018, the Bipartisan Budget Act of 2018 was signed into law, retroactively extending a number of tax provisions for the 2017 tax year. Among these changes was reauthorizing the treatment of mortgage insurance premiums as qualified residence interest for the 2017 tax year.

As a result of these changes, Quicken Loans is issuing corrected 1098 statements to clients who paid mortgage insurance premiums in 2017 in Box 5. You can access them online now, and if you haven’t signed up for paperless statements, they’ll be coming in the mail shortly.

Below, you’ll find more information on mortgage interest deductions as well as the info on corrections being issued to the 1098 statements for clients who paid for mortgage insurance in 2017.

Mortgage Interest

There are property value limits to the mortgage interest deduction, and you should consult a tax professional how this information applies to your tax filing if you’re unsure. That said, many homeowners may be able to deduct their mortgage interest for their qualified homes.

A primary or vacation home will generally fall under the definition of a qualified home.

Prepaid Mortgage Interest and Points

As part of the mortgage interest deduction, homeowners may be able to deduct prepaid mortgage interest and/or points associated with your mortgage transaction in some cases as well for a given year. Additionally, lending companies must report this information in certain cases on Form 1098.

It’s important to note that there are strict regulations around the year in which you claim the prepaid interest and/or points on your taxes. We advise talking to a tax preparation professional if you have questions.

Local Property Taxes

Another potentially deductible item is your local real estate taxes.

If you sold your home in the previous year, the federal government considers you to be the person who paid the property taxes up until the day you sell the property. You may be able to deduct the taxes on that property for the portion of the year you were living there. The IRS does have instructions on this, but if the math makes your head hurt, we strongly advise speaking with a tax professional.

What Does This Change Mean for You?

There’s a lot you can potentially deduct, but questions about the correction on your 1098 statement for clients who paid mortgage insurance are understandable. We’ve gone ahead and put together a list of questions and answers below to help you navigate your 1098 this tax season.

Why Are You Issuing Corrected 1098 Statements?

Since mortgage insurance payments weren’t deductible for 2017 at the time 1098 statements were issued, Quicken Loans followed the form’s instructions and left Box 5 for mortgage insurance premiums blank.

Now that mortgage insurance deductions have been retroactively applied to 2017 returns as part of the Bipartisan Budget Act of 2018, we’re resending the 1098 statements with mortgage insurance premiums included to impacted clients.

For more information on what this means for your taxes, we recommend consulting the IRS or a tax professional.

I Don’t Have a Tax Advisor – Who Can I Contact?

Individuals can reach out to the IRS at (800) 829-1040, IRS.gov, or your local IRS office. Additionally, your lawyer or any tax professional in your local area is likely able to assist you with such questions as well.

Can I Prepay My Taxes?

Please see the following statement from Quicken Loans CEO Jay Farner:

“Quicken Loans has always paid property taxes by calendar year end (for clients whose loans we service and maintain tax escrow accounts) if the taxes are assessed and payable by December 31.

This policy allows our clients to benefit from any tax advantages that paying property taxes by calendar year end may gain them.

In the situation where a client’s property taxes are not yet assessed and/or billed, we would not ‘prepay’ property taxes since the amount due would be unknown. This is our policy regardless of the time of year.

If a Quicken Loans client elects to pay unassessed and unbilled future taxes, Quicken Loans will continue to collect monthly escrow deposits and make any unpaid property tax payments as they come due. If the client’s prepayment of their property taxes has caused there to be excess funds in their escrow account, the client will receive a refund of any surplus of funds after an escrow analysis is performed.

Quicken Loans strongly encourages its clients to consult with a tax professional before making any ‘timing’ decisions related to the payment of property taxes that could result in substantial differences of overall income taxes owed and/or the timing of such payments, especially in a year, such as 2017, when significant changes to the tax code have taken place.”

I’m a Quicken Loans Client. What Number Can I Call to Get More Information?

You can reach us at our 1098 hotline. That number is (877) 457-1158.

What Number Can I Call to Verify This Information with the IRS?

Individuals can call their local IRS office or (800) 829-1040.

Please note that none of this information shall be construed as tax advice. If you’re seeking tax assistance, please reach out to your tax professional or the IRS.

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This Post Has 27 Comments

  1. I already filed my tax return and received the expected refund. I had no idea I could claim the mortgage interest. We paid over $5400 in mortgage interest, which would have resulted in a larger refund. Is there anything I can do at this time? I don’t want to pay someone to do this for me if it isn’t worth it. Is it possible, since this was not an option until recently, that the IRS will allow us to claim it with next year’s filing?

    1. Hi Theresa:

      Your servicer should be sending an updated 1098 form to both you and the IRS. It looks like the current IRS guidance is to go ahead and file an amended return at this point. Hope it helps!

      Thanks,
      Kevin Graham

  2. Hi,
    I forgot to ask-in regard to the VA Funding Fee (just posted a question a few moments ago). I have read there is an income limit of $100,000 to get the deduction of the VA Funding Fee. Is that Adjusted Gross Income after I have deductions of medical etc? So, if I have say, $90,000 earned income and social security on top of that, it brings me to around $117,000…will the VA Funding deduction be based on the $117,000 or the lower figure after I deduct my medical etc? Thank you!

    1. The VA funding fee is considered tax-deductible as mortgage insurance. In terms of the second question, I can’t reliably find simplified guidance around the income restrictions. Here’s what the IRS says, but I would consider talking to a tax professional. Thanks!
      Kevin

  3. Hi,
    I was told that the VA Funding Fee charges on our loan (bought a house in April 2017) is deductible and should have been listed in BOX 5 on our 2017 1098. Is this true?
    Thank you.

  4. SO do we really have Mortgage Insurance Premium deduction for 2017? My 1098 box 5 is blank. Do I have to call my lender?

    1. Hi Rita:

      If you itemize deductions, you can deduct mortgage insurance premiums for 2017. You would contact your servicer. That’s the company you send your mortgage payments to, which may or may not be the same as the company that originated your loan. Hope this helps!

      Thanks,
      Kevin Graham

  5. Hello,
    If I already filed 2017 taxes, leaving off Box 5 of the 1098 specific to the PMI paid in 2017, and received my expected refund, how will adding in this $1500~ amount benefit/hurt me?

    Am I expected to report it should I owe more? Or am I guaranteed to receive some money back due to it being considered a deduction?

    1. Hi Tyler:

      It’s a deduction, so it can’t hurt you. Whether you’ll get more money back probably depends on whether you itemized deductions in the first place. If you did that to take advantage of the mortgage interest deduction, there’s no reason not to report this additional deduction to the IRS now that you can since mortgage insurance is deductible. If you took the standard deduction, you have to see if it makes more sense to itemize now with this additional deduction.

      The one thing I’m going to refer you to a tax professional about is how to report this and when it should be reported. At the time of this publication, the IRS wasn’t clear on that point. A tax professional would probably be able to give you the most up-to-date and accurate information.

      Thanks,
      Kevin

  6. Just heard that Congress passed the extension for Mortgage Insurance Premium deduction for 2017. Will you be issuing corrected 1098’s to show the premium?

    1. Hi Jerry:

      They just snuck this extension in as part of the new budget bill that was signed Friday. As such, we’re still deciding the next steps on the best way to communicate the information clients need to know. In the meantime, although we were required to leave Box 5 blank on your 1098, mortgage insurance is now tax-deductible for the 2017 tax year. You can still see what you paid in terms of monthly mortgage insurance by looking on the Account Summary Page included with your original 1098. If our plans change, we’ll keep you updated along the way. Hope this helps!

      Thanks,
      Kevin Graham

  7. I have an FHA loan for house purchased in 2012 and pay MIP. Can I get MIP removed if I also have a home equity loan? Thanks

    1. Your home equity loan doesn’t really have anything to do with your FHA loan. It all concerns when you get to 22% equity based on the original value of the home at the time you purchased it. Whether you have a home equity loan or not doesn’t matter. Hope this helps!

    1. Hi Thomas:

      That question is actually a bit more complicated than you think, but I’ll try to break it down.

      If your FHA case number was assigned on or after June 3, 2013, you’ll pay mortgage insurance premiums (MIP) for the life of the loan if your down payment was less than 10%. If it was 10% or more, you pay MIP for 11 years.

      If your case number was assigned before that date, for a 15-year loan, MIP is canceled once you reach 22% equity in your home. If you have a term other than 15 years, MIP is canceled when you reach 22% equity as long as you’ve paid MIP for at least five years. Hopefully that’s not too confusing!

      Thanks,
      Kevin

    1. That’s a good question and the answer is complex so we have a chart at the end of this post. I hope that helps! If you happen to have the USDA loan, the guaranteed fees are for the life of the loan.

      1. Hi April:

        I see you’re a current client of ours and also looking to refinance. Under your current loan, I can’t see your original loan-to-value ratio, but if you made a down payment of less than 10%, you would pay mortgage insurance for the life of the loan because it’s FHA. If you made a down payment of 10% or more, you pay mortgage insurance for 11 years.

        Here’s the good news. If you refinance into a conventional loan and end up with more than 20% equity after the refinance, there’s no monthly mortgage insurance payment. Either way, with a conventional loan, you can request that mortgage insurance be removed when you reach 20% equity if you’re current on your loan. Hopefully this helps!

  8. May my closing costs be deducted as part of my 2017 tax return? I purchased my home at ***************************** September 15, 2017. If so, would you send me that information in order that I may give it to my CPA?

    Thank you for your assistance.

    Elaine H. Anderson

    1. Hi Elaine:

      The parts of your closing cost that would be tax-deductible are in the prepaid interest or discount points well as potentially prepaid taxes if there were any. These items will be listed in your Rocket Mortgage servicing account under documents. Assuming you haven’t signed up for paperless documents, you’ll also receive a copy in the mail by the end of January. I’m removing your address for your privacy.

      Thanks,
      Kevin Graham

    1. Your mortgage insurance has nothing to do with your escrow account. Your escrow account is your taxes and homeowners insurance. If you’re talking about homeowners insurance, then you can pay ahead of time. We’ll just refund the overage in your escrow account. Mortgage insurance cannot be paid ahead of time. I hope this clarifies things.

    1. Hi Madison:

      That’s a good question. I’m going to pass this along so we can look into it for you. Have a great day and someone will reach out soon.

      Thanks,
      Kevin Graham

  9. Will I receive a summary page form 1098 from Quicken Loans? I do not have internet where I can print it. I only have a smartphone.
    Thank you

    1. Hi Ernestine:

      If you haven’t signed up for paperless documents, you should receive a copy of your 1098 no later than the end of January. You can also access it via your smart phone with the Rocket Mortgage app and looking under the documents tab. I’m also going to get this to our client relations team to further assist.

      Thanks,
      Kevin

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