Do I have to report a refund of interest from my mortgage?
If you receive a refund of mortgage interest in the same year you paid it you must reduce the mortgage interest expense you report by the amount of the refund. If you receive a refund of interest you deducted in a prior year you generally must include the refund amount in income in the year you receive it. This amount may be reported in Box 3 of Form 1098. You only need to report income up to the amount you previously deducted.