Amending 2020 return and cannot enter points for refinance without getting errors saying I need a "Outstanding Mortgage Principal must have a value" How do I enter this?

[sehoffma]

I did what Turbo Tax said to add the 1098's together.  However, I have points and also have deduction limitation to contend with.  the Mortgage itself is 1.5MM which originated in 10/2015, one Refi was done in 07/2019, and the last refi was done 01/2020.  I paid points on both mortgages.  The first refi, I need to right off the remaining amount of points paid and the other will start a new 30 year amortization.  I keep running into the errors "Outstanding Mortgage Principal must have a value" when I try to just apply the points with no mortgage principal and outstanding principal.  I am also unable to enter the correct time frame so I get the MFJ 1MM limitation and not the 750K limitation.  Also These points are only shown on HUD not on my 1098.  If I use the origination date for the purchase on my home of 10/2015 and the acquisition date of 07/2019, the wrong amount of points are used for remaining amount.  If I put the 07/2020 in for the origination then the limitation is calculated as 750K deduction for my points.  The only way to do what I am trying to do is override almost almost the entire worksheet.  I amy as well just do my taxes the old fashioned way with pencil and paper.  TurboTax does not appear to be asking the proper questions and therefore will not do any of these calculations correctly.  I was already audited for 2019 because TT never calculated the Limitation at all.  Help please.

[Carl]

When dealing with a refi, you enter each 1098 individually one at a time, starting with the oldest loan first.

When you enter the 2nd 1098 for the refi, one of the screens will have a selection on it to indicate it is a refi. You must select that option.

Take note that since your mortgage balance on Jan 1 of the tax year exceeded $750K your interest deduction will be limited to the interest paid on the first $750K of the outstanding balance.

These points are only shown on HUD not on my 1098.

That's actually a good thing that your points are not duplicated on the 1098. You can and should claim the points as shown on the 1098.

When it comes to things like acquisition date, pay attention to details. The acquisition date of the home and acquisition date of the refi are not the same.  Additionally, if you did the refi with the same lender, then your remaining points (remaining amortized costs) on the old loan are not fully deductible in the year of the refi. They either continue "as is" over the life of the original loan, or you can add them to the amortized costs of the new loan for deduction over the life of that new loan.

If you did your refi with a different lender, then your remaining amortized costs on the old loan are fully deductible in the year of the refi. Just work through the amortized entry for the old loan in the assets/depreciation section. If you do it right, then the program (not you) will show those remaining costs to be deducted in the Rental Expenses section as a miscellaneous expense.

[sehoffma]

I'm sorry, this makes no sense at all.  The interest limitation for me is grandfathered at $1,000,000.  Why does TurboTax say to add all the 1098's together, now you tell me to separate them? Since the the first refi is paid off why can't those points be deducted fully? Why does it matter if the same lender or multiple lenders.  This is an entirely different mortgage with different mortgage points and the time frame starts over with a new 30 year mortgage.  This is extremely confusing.  I wish there was a place to complain about this, as the community board is not appropriate.  I am so done with TurboTax ever since the $1MM limitation changed to 750K TurboTax has made many mistakes and now I am being audited due to malfunctions in the software.  I still cannot figure out how to do this correctly and the IRS is now on my back.  Wow!

[fanfare]

the treatment for points depends on whether you refinanced with the same bank or a different bank.

"Mortgage ending early. If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. However, if you refinance the mortgage with the same lender, you can't deduct any remaining balance of spread points. Instead, deduct the remaining balance over the term of the new loan."
A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event."

See IRS Pub 936 for more examples of further complications and the rules for those situations.

[sehoffma]

I have refinanced this loan with the same lender multiple times, and have been charged points for each time the mortgage was refinanced.  How do I carry those spread points over from each of those mortgages that are already paid off in full and no longer show up in the software?

[Carl]

ENTERING POINTS

here's how to enter the points in the Assets/Depreciation section.. (does not apply to entering the property itself, or any other property assets.)
- Select the Add and Asset button. (go straight to the asset summary if presented that option)
- Select Intangibles/Other Property, then continue.
- Select Amortizable Intangibles, then continue.
- Describe it as something like "2020 Financing Fees".  Then enter the amount, and the closing date of the loan. Then continue.
- Select "purchased new", then "100% business use", enter the closing date of the loan (again), then continue.
- Code section is 163:Loan Fees, then continue.
- Useful LIfe in Years is the length of the loan, then continue.
- You can "show details" if you like. Then continue, and that does it

When entering the amount, that amount can include the remaining amount to be deducted from the old loan. However, make sure you delete the entry for the old loan if present so that you're not double dipping on the points deduction.

[sehoffma]

Thank you.  I am a bit confused about the part you refer to "purchased new", then "100% business use".  Would you mind explaining this a bit further? The 100% business use is throwing me.   The other question is how I am supposed to correct for my changing limitation.  My original loan amount was for a mortgage that exceeds $1MM.   The amount of the amortized points changes each year as the mortgage gets paid down.  I have 4 of the refinanced mortgages and 3 are paid off, but I cannot write the points off because I used the same  lender.   There are so many moving parts I don't know how to report this correctly.  I think the IRS does this, so people will just say forget it and just won't write off the points.

Thank you

[fanfare]

you have to keep track of the points deducted so far and subtract that from the points paid at all your closings with that lender.

Then divide that by the term of the latest loan.

Maybe turbotax does this properly  for you or not, I can't say.

If TurboTax failed to track this properly for you in the tax file history, you have to fudge the total points amount so that the end result is correct.

Doing this calculation yourself is probably easier than doing through depreciation, but what do I know, I could be wrong.