topic refinance mortgage in 2020 for original loan in 2019 and point in Deductions & credits

refinance mortgage in 2020 for original loan in 2019 and point

ak123 — Wed, 17 Mar 2021 05:31:43 GMT

I got a loan in 2019 for 20 years and paid points. While doing the 2019 tax returns I did enter the 1098 form in turbo tax but I got standard deduction as it was much greater than itemized deduction.

In 2020 I refinanced with another lender for 15 years. So for 2020 I have two 1098 forms:

one from original lender with mortgage origination date as 10/2019 and

one from the new lender with mortgage origination date as 09/2020

While doing my taxes for 2020 I am combining the two 1098 forms as a single entry based on the recommendation here: https://ttlc.intuit.com/community/loans/help/what-do-i-do-if-i-have-multiple-1098s-from-refinancing-my-home-debt/01/1897136

What should I enter for this questions as I did pay points in 2019 which I did declare while doing 2019 taxes but it was not counted as I got standard deduction.

Did you pay points in 2019 when you took out the loan?

- We paid points when we refinanced, purchased a second home, or opened a home equity loan in 2019.

- We've already deducted all the points we paid in 2019, or we didn't pay any points.

Next for this question, I assume I will choose 2:

Is this loan a home equity line of credit or a loan you've ever refinanced?
1. Yes, this is a loan I've refinanced or a home equity line of credit (HELOC).
2. No, this is the original loan I used to buy or build my home.

Re: refinance mortgage in 2020 for original loan in 2019 and point

JohnB5677 — Wed, 17 Mar 2021 12:54:24 GMT

What should I enter for this questions as I did pay points in 2019 which I did declare while doing 2019 taxes but it was not counted as I got standard deduction.

You should answer yes. You should have amortized the points over the life of the loan. A portion may still be available, but if you use the standard deduction this year there will be no additional tax break.

Did you pay points in 2019 when you took out the loan?

- We paid points when we refinanced, purchased a second home, or opened a home equity loan in 2019.

- We've already deducted all the points we paid in 2019, or we didn't pay any points.

You should select the first answer - We paid points when we refinanced

Next for this question, I assume I will choose 2:

You are correct. Choose (2)

Re: refinance mortgage in 2020 for original loan in 2019 and point

ak123 — Wed, 17 Mar 2021 14:43:59 GMT

Just to confirm I should select "We paid points when we refinanced, purchased a second home, or opened a home equity loan in 2019." But none of these is true as I did not pay when I refinanced, got a 2nd home or a home equity loan. I paid point when taking the original loan in 2019.

Regarding this "You should have amortized the points over the life of the loan." what does it mean? In 2019 I got standard deduction so there was no additional tax break that year. I am doing itemized deduction in 2020 so should I enter the full amount or some other value, as original loan was for 20 years and then I refinanced to 15 years. @JohnB5677

Re: refinance mortgage in 2020 for original loan in 2019 and point

DaveF1006 — Wed, 17 Mar 2021 19:01:15 GMT

It depends. Say no to the question we paid points when we refinanced, purchased a second home, or opened a home equity loan in 2019. See if this will clear the error regarding the amortization question. Also make sure to review your entries regarding the original 1098 and indicate this is an original loan and not a refinance. The reason the amortization is appearing because possibly there is a mention of a refinance in the original loan and if you refinance, you must amortized your points over the life on the loan.

Re: refinance mortgage in 2020 for original loan in 2019 and point

ak123 — Wed, 17 Mar 2021 19:50:53 GMT

there is no error for the amortization question. Ok I paid points in 2019, can I add them when doing 2020 return as turbo tax is asking me this questions. It seems it is asking as the loan origination date is 2019 in my 1098 2020 form. Also I did declare in my 2019 tax return that I paid points but it did not matter as I got standard deduction

Re: refinance mortgage in 2020 for original loan in 2019 and point

DaveF1006 — Wed, 17 Mar 2021 21:35:49 GMT

According to this link from IRS.gov., you can only deduct the full amount of the points in the year that you pay them but points can be paid ratably over the life of the loan. You may be able to be able to claim the amortized amount of the loan this year since you are itemizing.