My original mortgage was taken on my primary residence in 2017. I refinanced the loan in 2019, and then again in March 2021. I have the Mac downloaded version of Turbotax Premier, and I was wondering what is the right way to get the correct deduction in my case. Which of the following 2 options is the right approach, or if there is a different recommended approach, please advise.
(1). Add up both interest values from box (1) of the 2 1098 forms and enter that in the Box 1 in Turbotax. Enter the Outstanding mortgage principal as the amount on Jan 1 for the active mortgage on Jan 1 2021 (this was also a refinanced mortgage; not the original mortgage). Enter the mortgage origination date as Jan 6 2017 (the original mortgage origination date; not the origination date of refinanced mortgage of 2019 or 2021). On the question "Is the 1098 you're working on now the most recent for your loan?", what should I answer? If I answer "Yes", the deduction amount is much lower than that if I entered "No". Why is that?
(2). Enter 2 separate 1098’s. For the first 1098, enter the Outstanding mortgage principal as $1. For the second 1098, enter the right outstanding mortgage principal as listed in that 1098. Select the second one as the “latest” 1098. After entering both of the 1098, the deduction being given is different from what was provided for option (1) above. Then there is a question asked where we need to enter the outstanding loan balance on Jan 1 2022. The question says:
“What was the outstanding loan balance on Jan 1 2022? If you paid this off in 2021, enter the balance on the day you paid it off.”
What value should I enter for the older loan that was refinanced here? It is auto-filled to $1 (probably from the Outstanding mortgage principal I filled in earlier). Should this value be the full loan value that was refinanced? If I enter that, the deduction falls.
What is the correct way to do this?
