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Deductions & credits
Unfortunately, the formatting makes it difficult to follow the flow of the mortgages, but the solution is:
- The mortgage that you had at the end of 2019, (1st mortgage) will have a principle balance of zero, because it was paid of to secure the 2nd.
- The second mortgage will also have a principal balance of zero. Because it was paid off to secure the 3rd mortgage.
- Finally, the mortgage you currently have (3rd mortgage) will reflect the principal as of 01/01/2021.
The IRS instructions for completing Form 1098 state that box 2 should be the amount of principal outstanding on the mortgage as of January 1, 2021. If the loan was no longer being serviced by that company, there would be no outstanding principal on that mortgage and the amount should be "0".
Entering '0' into box 2 in your tax return is the correct way to handle a loan that has been closed out.
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‎February 14, 2021
5:10 AM