2022 HELOC 1098 Outstanding Mortgage Principal question

[RBro]

I opened a HELOC in August of 2022 against my current home at the time.  I used $250,000 from the HELOC for a down payment to purchase a new primary home.  After purchasing a new primary home in September of 2022, I sold the original primary home and paid off the HELOC in November 2022. 

I have received a 1098 for the HELOC with interest paid of $2000.  There is a $0.00 amount in box 2 for the Outstanding Mortgage Principal.  As I click through the questions in TurboTax Deluxe:  

1. I click this is for my primary home

2. I fill out the fields for the 1098 as per the form received in the mail (with the $0.00 amount in Box 2)

3. I click YES to the question that the loan is secured by a property of mine.

4. I click that there were NO POINTS for the loan

5. I click NO to the question "is this the most recent 1098 for this loan.

6. I click "that this loan is a HELOC"

The next page then states (Congrats You Get a Tax Break)

I DO NOT get asked what I used the HELOC funds for?

The main question I have is do I have to enter $250,000 in Box 2 of the 1098 even though the 1098 has $0?

Keep in mind I did open and payoff the HELOC all in 2022.

I understand that this interest isn't deductible since I didn't use it on my primary home at the time.  I just want to make sure I enter this properly as the way I am entering it with $0 in Box 2 of the 1098 gives me a tax break.

[DMarkM1]

Since the interest paid on the first 1098 is on a loan that is not on a qualified home you do not enter that 1098 in TurboTax. The 1098 entries are only for qualified home mortgages.   You should be sure to enter the second 1098 on your new home to get the itemized deduction for that interest paid.

Additionally, you should enter the sale of the prior home in the "Home Sale" topic in the "Less Common Income" dropdown menu under the "Wages and Income" section.  If you owned and lived in the home for at least 24 months prior to the sale you will be able to exclude up to $250,000 gain on the sale (500,000 if owned jointly with your spouse who also lived in the home).  

Here is a link to Publication 936 for Home Mortgage Interest

Here is a link to Publication 523 for the Home Sale Exclusion

[RBro]

I'm not sure which loan you are saying is a non-qualified loan.  The first loan I refer to is on the primary home I lived in that I took out the HELOC on.  I sold that primary home which also paid off the HELOC.  I didn't sell this primary home until 2 months after I purchased a new primary home.  I used the HELOC to put a down payment on the new primary home.

Are you saying I shouldn't bother entering the 1098 for the HELOC?

[DMarkM1 · Accepted solution]

Yes, that is correct.  The HELOC proceeds were used on another home not the one secured by the loan so the interest is not deductible as you mention.  So no need to enter that one in TurboTax because you are not claiming that interest deduction.