Home Mortgage Interest Limitation Smart Worksheet

[jonisteinberg]

I had one mortgage in 2022, however the originating bank sold off the mortgage and then that bank sold it off again.  I have three 1098 and Turbo Tax won't take it as I answered these questions correctly on the Home Mortgage Interest Limitation Smart Worksheet:

Bank 1 LIne A   Loan refinanced in 2022 with a new 1098? (not most recent 1098)  SAYING I HAVE AN ERROR HERE --IT WON"T TAKE MY ANSWER OF YES  (If I change to NO, it takes away my interest deduction which makes no sense and NO seems the wrong answer as it was refinanced to Bank 2)

Line B   Was the loan the result of refinancing a previous loan -- NO

Bank 2 LIne A   Loan refinanced in 2022 with a new 1098? (not most recent 1098)  YES

Line B  Was the loan the result of refinancing a previous loan -- YES

Bank 3 LIne A   Loan refinanced in 2022 with a new 1098? (not most recent 1098)  NO

Line B  Was the loan the result of refinancing a previous loan --YES

What am I doing wrong? The above noted error (?) is keeping me from being able to file.  I appreciate any help here.  THank you.  Joni

[NCperson]

I am not necessarily following, however, selling off the mortgage to another servicer is NOT a refinance.  is that the issue? 

was the loan taken out from the first servicer the result of purchasing a home? then is it NOT a refinance.  

start there. 

[jonisteinberg]

I did not refinance anything. One bank sold the mortgage to another bank and then that bank sold it to another bank.  When I answer NO to the two above questions, I lose my deduction which doesn't make sense.   Thank you conversing with me on this.  I appreciate any input.

[jonisteinberg]

I see I didn't answer your first question.  Yes the first loan was to buy a house.  That bank sold off the mortgage right away and then later in the year the second bank sold the mortgage to a third bank.  

How would you answer questions A & B above for each of the three banks?  Thank you.

[NCperson]

certainly, in all 3 cases, the question to whether you refinanced is "no".  a servicing transfer is NOT a refinance.

Start there. 

And if there is still no mortgage deduction, something else is wrong.  

I would focus on the 1st 1098 and delete the other 2 until the 1st one works.  there must be another question that you are answering incorrectly; it may not be on the 1098 itself. 

is it possible that when only the 1st 1098 is included your total deductions available to itemize is lower than the standard deduction, so TT doesn't itemize at all, but rather takes the standard deduction?  Once you add in the 2nd and 3rd 1098s it may switch to itemizing.  that is just a thought. 

[jonisteinberg]

I like your logic and will try all this in a bit later this morning.  Thank you for all the attention you're giving to this.

[jonisteinberg]

Thank you for your suggestions.  I tried two things:

1. I tried entering the loans incrementally as you suggested.  When I get to adding Bank 2,  I end up with the same problem.  And yet my response (which it says is in error) is the only way that the loans get considered incrementally and show only one loan open at the end of the year (on the Ded Home Mort form).  If I change to their answer, it shows as two open loans at the end of the year.

2.  Alternatively, I entered Bank 1 with the full interest for the year and it all worked fine giving me the same result as when I have them sequenced (although sequencing gives me an error)

Somehow with multiple loans, it doesn't like my answer.  When I look at the above referenced the summary mortgage interest worksheet, the responses I have are the only ones that produce only one mortgage active at the end of the year...as it should be.  Otherwise it takes them as separate loans, which of course they're not.

I read above that Turbo Tax had an error in this area at the beginning of the year but hard to imagine any such error would prevail to now.  I'm willing to think it's me and will continue to review.  Thoughts?

Thanks for staying in this conversation.

[NCperson]

suggestion: either call Support for help or

summarize and list as one 1098 (and not 3).  heaven for bid you ever get audited / questioned, you have the supporting evidence to explain what you did.  The tax will be correct which is all the IRS is really going to care about.

This area of TT has been 'messy' for quite a quite. 

[jonisteinberg]

On your suggestion, I called TT for support (I didn't even know I could do that).  A wonderful representative walked me through it over and over (sharing my screen) and there was no way to get results different from above.  She too could see how it should come out and so here was her suggestion:  Characterize the three sequential loans as one with the appropriate info (the total interest for the year), check the box that indicates my reporting is different from what CHase (alone) reported and explain the situation of the three sequential loans.  Done and it went through Smart Check.  I'm now ready to file.  You've been an enormous help in getting me to this point.  THank you for your expert attention to this (My recounting to her my journey as you had suggested was helpful to our call too).  THanks.

[NCperson]

@jonisteinberg - just so your language is clear, it is ONE loan, with 3 sequential servicers, 😀

it could only be multiple loan if you went through all the paperwork to pay off one loan and take out another - clearly, that is not what occured her. 

[jonisteinberg]

It was the purchase of a home.  And yes you're correct it was not a refinance, but the forms force it that way in order to create the sequence of lenders.  Turbo Tax absolutely would not let me create that logic on the home mortgage schedules.  Every fix, made something else incorrect.  My next best recourse was to characterize it as one lender all year and then indicate it's different from the 1098 and why.  It was the only honest way of representing the situation.  The TT support person concluded that actually.  Thank you for your thoughtful response.