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Level 1
posted Mar 9, 2021 8:23:54 PM

How do I deduct "prepaid interest" from refinance closing? New lender did not prepare 1098 as this was an end of year refinance.

This "prepaid interest" amount is listed under the section "Prepaids" not "Initial Escrow" so I would assume it would be tax deductible as it covered the last month prior to the first mortgage payment at the start of the year. TurboTax doesn't appear to give me the option to just add a one off deduction not tied  to a 1098.

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1 Best answer
Expert Alumni
Mar 9, 2021 8:52:03 PM

Prepaid interest paid at a real estate closing is deductible, whether reported to you on Form 1098 or not.  If not reported on Form 1098, and you did receive a 1098, then add the amount paid at closing to the amount on your 1098 when you enter it, and check the box for "The interest I entered is different than what's on our 1098."  On the next page, provide a brief explanation.  

1 Replies
Expert Alumni
Mar 9, 2021 8:52:03 PM

Prepaid interest paid at a real estate closing is deductible, whether reported to you on Form 1098 or not.  If not reported on Form 1098, and you did receive a 1098, then add the amount paid at closing to the amount on your 1098 when you enter it, and check the box for "The interest I entered is different than what's on our 1098."  On the next page, provide a brief explanation.