If the mortgage is on the s-corp's books, and they are issued the 1098, then they would take the expense, but they cannot use the asset, as they don't own it. The owner would put the building on his personal 1040. This is a good thing, as real property is generally not recommended to be titled in an s-corp. I am far from an expert on this subject, so do more research, and not just take my opinion.