No, that is not what @raifh is saying. You need to combine the 1098s from Lender A and Lender B and enter them as one 1098. To properly enter the interest and the 3 1098s follow these steps:
- Add the interest from Box 1 of the 1098s from Lender A and Lender B and enter this amount for the Box 1 amount .
- For Box 2 Outstanding Mortgage Principal enter the amount shown in Box 2 of Lender B's 1098.
- For the Origination Date use the date shown on Lender A's 1098.
- If the 1098s show points or mortgage insurance premiums report those as shown. However, if both 1098s show these items, make sure that you are not duplicating amounts. For points, you can compare that to your closing or settlement statement for the loan.
- Report this 1098 as not the original loan.
For the second home that you purchased and rented for 7 days in December 2021, you can report on your Schedule A because you only rented for 7 days in 2021. However, reporting this on Schedule A may put you over the $750,000 mortgage limit and cause you to lose a portion of your mortgage interest.
An alternative solution would be to report the rental income and 1098 on a Schedule E. This may cause a loss for 2021, but you will get the full deduction of interest. The loss will most likely be a passive loss. What this means is that the loss will carry forward and when you have income on the rental property, the loss can be used to offset the income. In other words, you may not see any effect on your 2021 taxes.
