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URL:  http://boards.fool.com/heres-the-deal-on-your-mortgage-interest-30502652.aspx

Subject:  Re: filing an amended return Date:  1/23/2013  8:42 PM
Author:  ptheland Number:  117513 of 121098

Here's the deal on your mortgage interest.

Mortgage interest is paid in arrears. That is, you pay it after it has accrued. The one exception is at the time of purchase. Then, you typically prepay the interest through the first of the following month.

So at your closing in November 2010, you prepaid interest for the time from closing to the end of the month. You next payment was due 1/1/ 2011 and paid the interest for the month of December.

You sent that payment in early and it was received before the end of December. Because you are on the cash basis of accounting, you deduct expenses when you pay them and not when they accrue. So for 2010, you paid the partial month of November interest at closing, and you paid the December interest at the end of December.

In 2011, your monthly interest for each month was due on the first of the following month. Assuming that you made your Feb 1 through Dec 1 payments on time (more or less), we know that those 11 months of interest were paid during 2011.

It would appear that you made your 1/1/2012 payment on or just after Jan 1. That would put the payment into 2012 and make it deductible then. So your 2011 1098 reflects the 11 month's of interest you paid during 2011.

Now in 2012, we continue to follow the same process. This time, you'll have your 1/1/12 through 12/1/12 payments for sure. That's 12 payments this time. And your 1/1/13 payment may have been made early enough to include in in 2012 as well. That could give you 13 payments on the 1098.

--Peter
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