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If you received a Form 1098-MA Mortgage Assistance Payments in addition to the Form 1098 Mortgage Interest Statement, you may use a special method to compute your deduction for mortgage interest, real estate taxes, and mortgage insurance premiums on your main home (certain conditions apply, see the following). You are NOT required to use this special method.

You are still able to claim a deduction for the full amount of mortgage interest, real estate taxes, and mortgage insurance premiums you paid yourself; however, the amount cannot exceed the sum of the amounts shown on Form 1098 for mortgage interest, real estate taxes, and mortgage insurance premiums.

Note. Form 1098-MA is not entered into the TaxAct® program and should not be filed with the return. Keep this form with your tax records.

Per IRS Publication 530 Tax Information for Homeowners, starting on page 2:

Hardest Hit Fund and Emergency Homeowners' Loan Programs

You can use a special method to figure your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions.

  1. You received assistance under:
    a. A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or
    b. An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state.
  2. You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home.

If you meet these conditions, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown in box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown in box 1 (mortgage interest received), box 5 (mortgage insurance premiums), and box 10 (real property taxes) of Form 1098, Mortgage Interest Statement.

You may also wish to refer to IRS Notice 2011-14 for additional information.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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