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Reporting Interest on Commercial Real Estate Loans

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What is the regulation on reporting interest on commercial real estate loans? And should we send a 1098 to all borrowers or a year end history of interest paid?

The IRS reporting requirement doesn't distinguish between commercial and residential real estate. It keys instead on who the primary obligor on an obligation is, and whether the obligation is secured by real property.

If a loan is secured by real property, and the primary obligor is an individual (includes sole proprietors), and the amount of interest paid by or on behalf of the individual is $600 or more, you have to deliver a 1098.

If the primary obligor is not an individual (even if trustees, comakers, guarantors or other hangers-on are individuals), or if there is no real property involved, or if the amount of interest on the obligation was less than $600, there is no 1098 requirement. Any reporting you do in those cases would be as an accommodation.

First published on 3/20/06

First published on 03/20/2006

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