topic My mortgage got bought beween three different mortgage firms in 2024 - Tubotax only gave me credit for one 1098 in Deductions & credits

My mortgage got bought beween three different mortgage firms in 2024 - Tubotax only gave me credit for one 1098

kunz1 — Fri, 31 Jan 2025 17:34:36 GMT

My mortgage went from Rocket Mortgage to Flagstar on 6/1/24 to Lakeview on 12/14/24. I received 1098's from each of these institutions but Turbotax only gave me credit for Rocket Mortgage ($15,845 of interest). It left out Flagstar at $21,507 and Lakeview at $3,573.

Shouldn't I get credit for the total of $40,925 for all three?

Re: My mortgage got bought beween three different mortgage firms in 2024 - Tubotax only gave me c...

RobertB4444 — Fri, 31 Jan 2025 18:03:53 GMT

You are only allowed to deduct interest on the first $750,000 of mortgage debt that you pay interest on. When you entered the 1098s for the three mortgage companies the 1098s showed the mortgage debt as the full amount that you were carrying at the time. The system added them up as though they were three separate mortgages and limited your deduction. There are two ways to handle this.

The first is combining all three of the 1098s into one for Lakeview which holds the mortgage debt currently. Then all of the mortgage interest will be reflected as paid on the one mortgage which is correct. You should definitely do this if the amount in box 2 of the Lakeview 1098 is greater than $750,000 so that only the percentage of interest that you are allowed to deduct will appear on your return.

The other option is that you should change the amount in box 2 of the first two 1098s to zero. This is also correct since the balance of the mortgage had been transferred to the successor bank so they were no longer carrying a balance at the end of the year. Then only the Lakeview 1098 would have an amount in box 2. Provided the balance on your mortgage is less than or equal to $750,000 this will allow you to deduct the full amount of your mortgage interest.

@kunz1

Re: My mortgage got bought beween three different mortgage firms in 2024 - Tubotax only gave me credit for one 1098

zomboo — Sat, 01 Feb 2025 09:18:56 GMT

Yes you should get credit for the $40,925 total interest paid to Rocket, Flagstar, and Lakeview but your deduction will be limited to the interest paid on an average principle balance up to $750K. Did you enter the 1098s in order of origination? Did you select 'This is not the most recent 1098' for Rocket and Flagstar? These 1098s were not paid off or refinanced, so don't select that option.