This paper presents the d-q axis equivalent circuit model of an interior permanent magnet (IPM) which includes the iron loss resistance. The model is implemented to be able to run in real-time on the FPGA-based HIL simulator. Power electronic devices are removed from the motor control unit (MCU) and a separated controller is interfaced with the real-time simulated motor drive through a set of proper inputs and outputs. The inputs signals of the HIL simulation are the gate driver signals generated from the controller, and the outputs are the winding currents and resolver signals. This paper especially presents iron loss prediction which is introduced by means of comparing the torque calculated from d-q axis currents and the desired torque; and minimizing the torque difference. This prediction method has stable prediction algorithm to reduce torque difference at specific speed and load. Simulation results demonstrate the feasibility and effectiveness of the proposed methods.