Can anyone tell me if we are "required" to send 1098's on lot loans (real estate, no dwelling or improved property)? The info I've found on IRS website says the interest in not necessarily deductible, but I can't find anything that says we should be sending 1098's.
Thanks

If the borrower is an individual and any portion of the collateral is real estate (read: dirt), the interest is reportable.

As you note, generally the interest on a lot loan would not be deductible, but the rules on reportability and deductibility do not mesh. For example, interest paid on a motor home may be deductible as a residence or vacation home, but it is not reportable.

For assurance, take a look at the 1098 instructions on the IRS Web Site: http://www.irs.ustreas.gov/forms_pubs/index.html