I sold my primary residence home in Aug. 2021 and had interest of 29,000 on a 640,000 mortgage, and the existing mortgage was paid off. In Dec. 2021 I purchased a new home for my primary residence and had Mtge. interest of 514 on a mortgage of 480,000, When I add the new lender mortgage expense of 514, it triggers a limitation since the software appears to be adding the two mortgage balances together. Is this a bug in the turbo tax software?
When you pay off an existing mortgage and take on a new mortgage in the same year, how you enter the information for Forms 1098 will affect the mortgage interest limitation calculations. The IRS looks at the mortgage balance at the beginning of the year, or when the mortgage originated, whichever comes first.
To properly report these transactions, Form 1098 Box 2 amount on your new home purchase should be blank. This avoids double-counting your mortgage amount. Be sure to enter the mortgage origination date in box 3.
Box 2 for the paid-off mortgage should be as of 1/1/2021. Otherwise, enter the information from this form as it appears.
When you pay off an existing mortgage and take on a new mortgage in the same year, how you enter the information for Forms 1098 will affect the mortgage interest limitation calculations. The IRS looks at the mortgage balance at the beginning of the year, or when the mortgage originated, whichever comes first.
To properly report these transactions, Form 1098 Box 2 amount on your new home purchase should be blank. This avoids double-counting your mortgage amount. Be sure to enter the mortgage origination date in box 3.
Box 2 for the paid-off mortgage should be as of 1/1/2021. Otherwise, enter the information from this form as it appears.