Appreciate the help @RaifH !
@RaifH wrote:
Almost perfect. For the new loan, when it asks When did you buy the home with the loan from the second lender? Enter the date that you originally purchased the home, not the date of the refinance. If you originally purchased the home before December 15, 2017, then your entire mortgage interest should be deductible.
Once you change that answer, if you have an older loan, TurboTax should tell you all the interest is deductible. If it is newer than that, a small portion of your loan may not be deductible.
I just changed the second refinance date to the original purchase date but my fed and state tax/refund didn't move. My house was bought after that time so there is a cap of 750,000 due to the 2018 Tax law. So this is the reason why it didn't move? Also this is my first refinance through the same lender so I don't have many loans in the past.
If you are getting deductible interest around half the interest you paid, TurboTax may be calculating wrong based on your entries. In that case, delete the forms and re-enter them using the same answers you gave.
How can I tell if Turbotax is doing this? While my tax/refinance for Fed and state didn't change after I updated the date for my refinance mortgage for "When did you buy the home with the loan from the second lender?", I did see the number move when I change box 1 for the first 1098 and also for the second 1098 as well (just to test). Also did you mean remove two of the 1098 forms and then re-enter or only removing the second 1098 from the refinance loan after I updated my answer above and then just re-enter that one only?
UPDATE: I'm curious to know what you mean by the above statement so I just removed all my Mortgage interest 1098s and then re-entered them one by one using the same answers I had including the updated date for the second refinance mortgage (to match with the first mortgage date). I didn't see any changes in my Fed and state tax/refund. What was interesting was if I remove my second 1098 (refinance), my Fed tax bill and state refund go down a bit. Is this normal?
