To handle the HELOC refinance in TurboTax, you'll work on two different sections.
How to Deduct Points
As far as filing taxes goes, claiming a tax deduction for mortgage points is a fairly straightforward process. Mortgage points are considered an itemized deduction and are claimed on Schedule A of Form 1040. Here are the specifics:
- Usually, your lender will send you Form 1098, showing how much you paid in mortgage points and mortgage interest
- Transfer this amount to line 10 of Form 1040 Schedule A
- If any of your points were not included on Form 1098, enter the additional amount you paid on line 12 of Form 1040 Schedule A
How do I record my HELOC interest?
You can record your HELOC interest using TurboTax Deluxe Online edition.
To record your interest, login and press the "Take me to my return" button
- Select the search button located near the top right of your screen.
- Type 1098 into the search box
- Select Jump to 1098 from the results list.
- Answer the questions on the following screens to record your HELOC.
Mortgage refinancing fees are generally not tax deductible on a personal residence. You'll need to amortize and take the itemized deduction. Keep in mind, though, that you can include those costs in your home's basis. This will help reduce the capital gain when the house is sold in the future.
What if my refinance loan is immediately sold to a new lender?
When a refinance loan is immediately sold to a new lender, you'll use the 1098 that you received from the original lender (assuming that is where you got your 1098 from.) You did not chose to refinance with lender #2; it was an automatic sale of the loan not of your doing, so you don't have to associate the points with them.
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