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I have two 1098 forms: One from the lending institution and another from the Corporation. For the lending institution 1098 form, I deduct the mortgage interest and there are no real estate taxes. It's a secured loan.

For the Corporation 1098, I have mortgage interest and real estate taxes. Box 7 is not checked, however, and Box 8 is blank. Despite that, I'm still thinking it's likely a secured loan. What makes me say that?

Well, the letter I received from the Corporation's accounting firm states: "Tenant-shareholders in a cooperative housing corporation are permitted to claim a deduction on their 2021 income tax returns for their proportionate share of real estate taxes and interest paid or incurred by the Corporation."

If it's a secured loan, then the mortgage interest is tax-deductible, is that correct? If so, then, conversely, an unsecured loan's mortgage interest is not tax-deductible.

With all that being said, would you say my share of the corporation's mortgage is a secured or unsecured loan?

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  • littleadv is correct. By definition, the 1098 is given for a mortgage. A mortgage, by definition, is secured by real property. You are correct that either Box 7 should be checked or Box 7 should be blank and Box 8 be filled in (as described here: irs.gov/instructions/i1098). Personally, I would have no issue assuming it was an oversight by the 1098 preparer and deduct it, but you can always start reaching out to a coop representative, etc to get clarification.
    – Ryan
    Commented Apr 18, 2022 at 16:20

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Whether the loan is secured or unsecured is detailed in the loan documents. Have you signed a mortgage agreement/trust deed? That would be the securing document.

The fact that you got a 1098 for that loan tells us that in very high likelihood it is a secured loan. 1098 is a form for Mortgage Interest Statement, and the Mortgage is defined in its instructions as:

A mortgage is any obligation secured by real property.

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  • The Corporation's mortgage loan document I don't get a copy of and it's not something I'd have signed. That's a loan taken out by the corporation. I have a separate mortgage loan with a bank which I signed. With a co-cop, I have shares of the corporation and the 1098 they send me is the mortgage interest and real estate taxes for my shares. The tax software does not deduct the corporation's interest if I say it's unsecured. If I say it's secured, the tax software deducts their interest. Their accounting firm states I'm entitled to deduct it, however. I feel like it's a secured loan.
    – user3621633
    Commented Apr 16, 2022 at 20:00
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    @user3621633 I'm assuming this is a mortgage for the common interest part of the building? If their accounting firm says you can deduct it and the form says you can deduct it - why are you not sure?
    – littleadv
    Commented Apr 16, 2022 at 20:14
  • This is a mortgage for the entire property, including co-ops and common areas. I think the corporation takes out a mortgage on itself to fund improvements and those payments come out of maintenance fees. The 1098 I receive from the corporation is my portion of their mortgage. My shares in the corporation aka the apartment I own. I'm unsure because Box 7 is unchecked and Box 8 is blank on their 1098. You'd think the form would have the address of the property securing the mortgage in Box 8. I guess the letter is basically saying it's a secured loan then. Thank you for your help!
    – user3621633
    Commented Apr 16, 2022 at 21:39

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