How do I enter multiple 1098s due to Construction Loan/Mortgage/HELOC?

[sehook]

I have three 1098s - one is for a construction loan, one is for the mortgage the construction loan was converted into, and the last is a HELOC loan. The construction loan was converted into a secured home mortgage within 2 years of the date of the construction loan, and the HELOC was to help pay for the house and improvements on it. From my understanding all three qualify for deducting the interest, but how do I enter all three? Do I combine the construction loan and the home mortgage? And then enter the HELOC separately? Thank you!

[LinaJ2020]

If you have more than one 1098 form, I will recommend you to combine all 1098 forms and enter as one. I am attaching a TurboTax link for the instructions how to do claim your mortgage interests.  Click here:

Multiple Form 1098s

For special requirements for HELOC, click here: HELOC

For tax years prior to 2018, your mortgage interest deduction is generally limited if all mortgages used to buy, construct, or improve your first home (and second home if applicable) total more than $1 million ($500,000 if you use married filing separately status). Beginning in 2018, this limit is lowered to $750,000.  For more information about the mortgage interest deductions, click here: Mortgage Interest deduction

[sehook]

I read all of those links BEFORE I posted my question.

So, YES, I should combine the construction loan and mortgage 1098s, and enter the HELOC separately? Or, NO, I should be combining all three?

[Cynthiad66]

Try this:

You should combine all of the 1098s directly related to the refinance and enter it as one 1098.  An example of this is if you refinanced two loans into one loan. Any 1098s not directly related to the refinance should get entered separately.

HELOC enter separately because:

•  

A HELOC is another story, and here's where it gets more complicated. In the past, a HELOC was treated separately and the interest expense on up to $100,000 (single or married filing jointly) was tax-deductible no matter how the money was spent.

Under the new law, home equity loans and lines of credit are no longer tax-deductible. However, the interest on HELOC money used for capital improvements to a home is still tax-deductible, as long as it falls within the home loan debt limit. Dates are important here, too. If you used a HELOC for home improvement before December 15, 2017, it would be grandfathered in to the $1 million limit. However, if you spent the money on December 15, 2017 or later, you'd be subject to the $750,000 limit.

• If you use a HELOC for home improvement, you may still be able to deduct the interest.

• HELOC money used for anything other than improving your residence — such as paying down debt — is no longer tax-deductible, but that doesn't mean that a HELOC isn’t a valuable tool.

• The limit on deductible interest for your mortgage is now $750,000 of indebtedness for tax years 2018 through 2025. However, if your loan originated before December, 15, 2017, you will still be able to deduct the interest on up to $1 million of indebtedness.

[sehook]

Nevermind. I'll just do what I think since my question keeps being evaded in favor of talking about whether or not I can deduct the interest. I thought I made it clear what my question is and that I know that I can deduct the interest and that this isn't a refinance, but whatever.

[Stryker15]

Did you figure out what to do?
I'm in the same situation except without a HELOC loan. The outstanding mortgage principal on the construction loan is also a little bit smaller than that for the permanent mortgage loan. Confused about what to do and can't find an answer.

[ReneeM7122]

The following explains how to handle multiple 1098 forms:

If you have multiple 1098 mortgage forms, you’ll enter them one at a time. After going through the steps with the first one, you can add a lender when you get to the Mortgage deduction summary screen. (In the case of a refinance, it's best to enter the 1098 from your original loan before the 1098 from your refinance.)

But, if they're both from the same lender, and one of them has the “Corrected” checkbox marked at the top, enter the corrected 1098 and discard or shred the other one.

What do I do if I have multiple 1098s from refinancing my home debt?

If your total home debt is under $375,000 ($250,000 for married filing separate) there is nothing new for you to do in 2020. Enter each 1098 as you normally would.

Home Debt Over $375,000

Under tax law, you are limited on the amount of home interest you can deduct. The limit is based on the loan amount and date of the origination of debt. We want to make sure we calculate this correctly for you. 

If you refinanced last year, you’ll have a Form 1098 from your previous lender and one from the lender you refinanced with. You’ll need both forms. 

Follow these steps to enter your mortgage information:

1. Gather all of your 1098 forms related to your refinance (the form from your original lender and the form from your new lender)
2. Grab a calculator and add together the box 1 amount from each form. Enter the total in TurboTax as Box 1 Mortgage interest.
3. Add the Box 5 amount from each form and enter the total as Box 5 Mortgage insurance premiums. (If you weren’t required to pay mortgage interest, these boxes will be blank on your forms and you won’t enter anything.)
4. Add the property tax paid from each form and enter it in the Property (real estate) taxes box.

Next, finish adding info for boxes 2, 3, 7, and 11 using Form 1098 for the original loan.

What if I have more than two 1098s?

You should combine all of the 1098s directly related to the refinance and enter it as one 1098.  An example of this is if you refinanced two loans into one loan. Any 1098s not directly related to the refinance should get entered separately.

What if I paid points?

Points on Loans Paid Off in 2020: Enter the points on your 1098 you have started and mark you paid off the loan when promoted.

Points on Loans on New Loans: You will want to enter a separate 1098 to cover these points paid. When prompted, enter 0.00 for Boxes 1, 2, 5, and the Property (real estate) taxes box, and checkbox 7, as you’ve already entered the details on your first 1098. For Box 3, add the date in 2020 when the loan originated.

@Stryker15

[Stryker15]

I am still having problems with this. The construction loan is for the SAME house as the permanent mortgage loan it was converted into after the home was built. If I enter the two 1098's separately, I can only check box 7 for one of these to claim it as my address for a deduction. But since both interests amounts were used towards the same house (one during building, one after it was finished), should I be able to deduct both of these? Should I add the two amounts in Box 1 for each form instead?

[ReneeM7122]

While you do need to combine the 1098s together, box 7 should be the amount that is from the original.  Add the totals from both Box 1's and enter that number.

Follow these steps to enter your mortgage information:

1. Gather all of your 1098 forms related to your refinance (the form from your original lender and the form from your new lender)
2. Grab a calculator and add together the box 1 amount from each form. Enter the total in TurboTax as Box 1 Mortgage interest.
3. Add the Box 5 amount from each form and enter the total as Box 5 Mortgage insurance premiums. (If you weren’t required to pay mortgage interest, these boxes will be blank on your forms and you won’t enter anything.)
4. Add the property tax paid from each form and enter it in the Property (real estate) taxes box.

Next, finish adding info for boxes 2, 3, 7, and 11 using Form 1098 for the original loan.

@Stryker15

[help64]

I have both the construction loan and now the mortgage loan 1098's. From what I understand, I need to combine the interest, insurance etc. Do I use the Mortgagee information from the Mortgage loan or construction loan? The construction loan was only for 2 months of 2022 and then we moved to the mortgage loan.

[AmyC]

You  can enter your current mortgage provider information. The sch A lists one mortgage interest that is created by all the worksheets behind the scenes. If you want to just enter one statement with the correct numbers, you can. 

So far, Congress has not extended the law to allow a deduction for Private Mortgage Insurance. I would enter it  - in PMI -in case they change their minds to Turbo Tax can notify you.

Reference: Schedule A line 8 Mortgage Interest

@help64