Deductions & credits

I assume this is ONE loan, what was reported in Box 2 on the forms? 

Were there Points involved? 

If the loan balance was less than 750,000, and the loan simply went from one lender to another (sold from one bank to the other) and the ENTIRE loan went to purchase the home on which the loan is secured, (no cash was ever taken out for other reasons) then you could enter it as if it were only one form.

Add the interest from both forms, use the earliest date for origination and the highest loan balance in Box 2. 

Regulations concerning Home Mortgage Interest changed several years ago but Form 1098 did not change enough to provide all the information needed, which is why there are so many questions in that interview. 

For the interest to be deductible, the loan must be secure by the home. You can't take a mortgage on one house and use it to buy a different house. 

The loan balance must be under a certain amount (usually 750,000 but only 375,000 if filing Married Filing Separately and there are exceptions to loans taken before 2017)

When there is more than one Form 1098, the program may add the loan balances together and limit the interest thinking the loan balance is over the limit. 

HERE is a link to IRS Pub 936 

If you do not feel comfortable adding the interest and entering as one form, use the directions below and disregard points if there were none.

Enter the first (oldest) 1098 and indicated that it was secured by home 
Select BOTH "new loan with points" and "bought or improved home in 2024"
Enter points
Select YES "This loan was paid off or refinanced with a different lender in 2024". 
(NOTE; If you indicate NO to "paid off or refinanced", the program will add the mortgage balances)
No, not most recent 1098
"HELOC or refinance?" NO
Yes, only used on this home
The points and interest should be added and reported on Schedule A

Enter the second 1098 
Yes, secured by home
Indicate that you bought or improved the home with this loan, but  DO NOT indicate that it was a NEW loan, DO NOT ENTER POINTS A SECOND TIME
Yes, most recent 1098
Neither HELOC nor refinance 
Yes, only used on this home
DONE

Using the above steps, I entered 740,000 and 735,000 as the balances on the two 1098 forms and the interest was not limited. (the program did not add them together)
All interest and points were reported as deductions on Schedule A
I did get a "Let's Check These Entries" when I ran "Smart Check" where I had to indicate if either loan was a refinance. 
I selected "Refinance NO"
The full deduction remained on Schedule A