I had this problem this year since I did refinance.
To handle multiple issues on the forms, I handled it as below:
Use case:
Loan 1 - Opening balance 900,000 (Closed during the year)
Loan 2 - Opening balance 100,000 (Closed during the year)
Loan 3 - NEW 900,000 - Closing balance by end of the year 890,000
Interest on Loan 1 - 20000
Interest on Loan 2 - 3000
Interest on Loan 3 - 7000
I did fill the turbo tax data as below, since I have 3 Form 1098.
Box 1 - Mortgage Interest - 30,000
Box 2 - Outstanding Mortgage Principal - 1,000,000 (sum up box 2 values of Form 1098 of loan 1 and loan 2)
Box 3 - Mortgage origination date - 1/1/2018 (from box 3 of Form 1098 of old Loans)
In the subsequent box - for outstanding loan balance on Jan-1st-2021, I keyed in 890,000.
This ensures that the
- no. of months of the loan to be 12 (in the worksheets)
- average balance to be 945,000
- Interest of 30000 distributed as 750K / 945k - calculated as 23809 for claiming as interest deduction.
I understand this doesn't represent true values in the worksheets. But with Turbo tax constraints, this workaround seem to be addressing the issue.
Pl. share your thoughts.
