Quote Quoting flyingron
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You don't submit 1098's to the IRS. You must declare the interest. If the IRS gets hinky they'll send you her a letter and ask her to justify the deduction.

Thanks for replying.

The 1098 is required to be filed with and sent to the "payer of record," but again that's a fairly arbitrary decision the bank makes. You can certainly ask them to make her the payer of record.
I know I don't submit the 1098's. I was asking who determines which one of us (me or my fiancee) will get the 1098 forms. I guess my wording must be confusing, sorry.

"Payer of record" will be me if the lender uses the first person on the note. This lender will be selling the mortgage to who knows...

I simply want this done correctly from the beginning so we don't have to mess around with all of this next year, and the year after that, and the year after that, etc.

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Quote Quoting adjusterjack
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The lender will issue the 1098 to the first borrower listed on the mortgage and use the SSN of that borrower.

You can, of course, fill out the loan application with your fiancé as the first borrower but the lender is free to deny you the loan if you don't do it the lender's way.

As for who gets the deduction, the following comes from IRS Publication 936

"More than one borrower. If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on a mortgage that was for your home, and the other person received a Form 1098 showing the interest that was paid during the year, attach a statement to your return explaining this. Show how much of the interest each of you paid, and give the name and address of the person who received the form. Deduct your share of the interest on Schedule A (Form 1040), line 11, and print “See attached” next to the line. Also, deduct your share of any qualified mortgage insurance premiums on Schedule A (Form 1040), line 13.
Similarly, if you are the payer of record on a mortgage on which there are other borrowers entitled to a deduction for the interest shown on the Form 1098 you received, deduct only your share of the interest on Schedule A (Form 1040), line 10. Let each of the other borrowers know what his or her share is."


http://www.irs.gov/pub/irs-pdf/p936.pdf

If you get the 1098 and your fiancé takes the deduction for interest and property taxes, attach a duplicate statement to each return explaining the agreement. At least, that way you get it on record. Do it every year.
Thanks.

That will mean we'll need to send in tax returns via snail mail. I've been sending in our returns electronically for almost 15 years now. That's why I want to get this straight right from the start. And I honestly don't see why this is such a big deal to the lender. I read Fannie Mae's regulations, and Fannie Mae doesn't care who is listed as Borrower or Co-Borrower., so why does the lender?