Form 1098: A Guide for Australians with US Property in 2025

If you’re an Australian expat or investor with a mortgage in the United States, you’ve probably come across Form 1098. It’s a document that sounds technical, but it’s at the heart of how mortgage interest is reported to the US Internal Revenue Service (IRS). As global property investment grows and tax rules evolve, understanding Form 1098 has become increasingly relevant—even if you call Sydney or Melbourne home.

What Is Form 1098 and Who Gets It?

Form 1098, officially known as the ‘Mortgage Interest Statement,’ is issued by US lenders to borrowers who’ve paid $600 or more in mortgage interest in a calendar year. It details how much interest and certain points you’ve paid, plus other information the IRS uses to verify deductions.

• Who receives it? Anyone who pays mortgage interest to a US lender, including foreign nationals and expats.
• What does it cover? Interest on first and second homes, investment properties, and sometimes even home equity lines of credit.

For Australians with a US property, this form is your proof for claiming mortgage interest deductions on your US tax return. Even if you don’t owe US taxes, you might need to file—and Form 1098 helps you get it right.

Why Form 1098 Matters for Australians

With the US and Australia having a tax treaty, double taxation is generally avoided. But property income and deductions still need to be reported in both jurisdictions. Form 1098 ensures you’re claiming the correct interest deductions in the US, and provides documentation for Australian tax authorities if they ask about your overseas property dealings.

Practical scenarios where it’s vital:

• US expats: Aussie citizens living in the US and paying off a home.
• Remote investors: Australians who’ve bought US property as part of a diversified portfolio.
• Temporary work assignments: If you’ve taken out a US mortgage during a secondment or relocation.

In all cases, Form 1098 is your official record, and not receiving it (for example, if your lender doesn’t have your current address) can cause headaches at tax time.

2025 Updates: What’s New in US Mortgage Reporting?

The IRS has made a series of tweaks to mortgage interest reporting for the 2024–2025 tax year. Here’s what stands out:

• Digital delivery: More US lenders are offering Form 1098 online. Make sure your contact details are up to date if you’re overseas.
• Expanded reporting fields: Lenders must now specify if the property is the borrower’s principal residence, which can impact deduction eligibility.
• Interest cap reminders: The Tax Cuts and Jobs Act (TCJA) interest deduction cap—still in effect for 2025—means deductions may be limited to interest on up to US$750,000 of mortgage debt for loans taken after December 2017.

For Australians, these changes mean closer scrutiny of how much interest you can deduct and on which properties. The ATO may also request US tax documents as part of their data-matching initiatives, especially for high-net-worth individuals.

How to Use Form 1098 in Your Tax Filing

While the IRS receives a copy of your Form 1098 directly from your lender, you’ll use the document to complete Schedule A (Itemized Deductions) if you’re required to file a US tax return. Double-check the following:

• Names and SSN/ITIN: Must match your US tax records.
• Mortgage interest amount: Ensure it matches your own payment records, especially if you’ve refinanced or changed lenders mid-year.
• Points paid: Some loan origination fees can be deductible—Form 1098 will specify these.
• Property address: Confirm accuracy if you own multiple US properties.

If you’re reporting US property income or deductions in Australia, Form 1098 can support your claims and help avoid double taxation. Keep digital and paper copies for at least five years.

Common Pitfalls and Best Practices

• Missing forms: Contact your lender by February if you haven’t received Form 1098. International addresses can cause delays.
• Exchange rates: Use the correct ATO exchange rate when converting interest paid for your Australian tax reporting.
• Professional help: US-Australia cross-border taxation is complex. An accountant familiar with both systems can help you maximise deductions and stay compliant.