Form 1098-MA is for informational purposes only and is used to report payments made by:
- State Housing Finance Agency (HFA) under the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HFA Hardest Hit Fund)
- Payments made by taxpayer (homeowner mortgage payments) under these programs.
There are three boxes on the form:
Box 1. Shows the total amount of State HFA mortgage assistance payments and homeowner mortgage payments.
Box 2. Shows the amount of State HFA mortgage assistance payments.
Box 3. Shows the amount of mortgage payments the homeowner paid to the State HFA.
For tax return preparation purposes, Form 1098-MA can be used to ensure that taxpayers who are including mortgage interest as an itemized deduction only include the mortgage interest they actually paid.
Hardest Hit Fund and Emergency Homeowners' Loan Programs. Taxpayers can use a "safe harbor" method to compute their deduction for mortgage interest and real estate taxes on their main home if they meet the following two conditions.
- The taxpayer received assistance under:
- A State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest, or
- An Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state.
If the taxpayer meets these tests, they can deduct all of the payments that they actually made during the year to their mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received from payer(s) / borrower(s)), box 4 (mortgage insurance premiums) and box 5 (real property taxes). The taxpayer isn't required to use the safe harbor method to compute their deduction for mortgage interest and real estate taxes on their main home.
Mortgage assistance payments under section 235 of the National Housing Act. If a taxpayer qualifies for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on their mortgage may be paid for them. A taxpayer cannot deduct the interest that is paid on their behalf.
No other effect on taxes. Do not include mortgage assistance payments as income. Also, do not use these payments to reduce other deductions, such as real estate taxes.