I bought and sold a home in this year and have 2 1098s. For a period of one month I carried a mortgage on both homes. How do I get Turbotax to understand this situation?

[raynersam]

Turbotax is treating this situation as if I currently hold both mortgages and won't let me file, saying that I need to wait for some form that isn't yet optimized for people holding two or more mortgages with limited interest. But I don't hold two or more mortgages. Even entering "0" as the outstanding balance for the 1098 of the mortgage I closed doesn't fix the issue. I already paid for turbotax but am considering asking for a refund as this is extremely frustrating....

[RaifH]

The Mortgage Interest Worksheet may be getting highlighted because the Box 2 Outstanding Mortgage Principal amounts on Form 1098 are adding up to more than $750,000. This is lowering the deduction that you may be eligible for if you are itemizing deductions because the finalized worksheet is not estimated to be available until February 17, 2022.

For more information on the limit to mortgage interest deductibility, see IRS Publication 936. If it does not appear that you are benefitting from itemizing your deductions this year, then you can delete the information from your 1098s and that will clear the error. Just be aware that depending on what state you are in, not including this information can also affect your state tax return. 

[raynersam]

Raif, 

Thank you so much. The issue may be that my new mortgage is over 750k, so even when I put "0" for box 2 on the 1098 for the mortgage I closed, the total will always be over 750k. 

I do want to itemize as I think this is going to give me the biggest deduction. 

One question: can I combine the two forms into one 1098 so it isn't flagging this as multiple mortgages? I did hold both mortgages for a period of 3 weeks, but for most of the year I only held one at a time. Otherwise I guess I will wait until 2/17 to see what Turbotax comes up with. 

Thanks,

Sam

[RaifH]

No, I wouldn't combine the two mortgages into one form since they are for different houses. If you'd like, you can calculate the average mortgage balance prescribed by the IRS. According to the IRS, for any month the loan was not secured by your home, you would use 0. So if you purchased your new home in July, your outstanding mortgage was $0 for January through June and approximately whatever is reported on your Form 1098 for July through December. You can find the exact amounts on your monthly mortgage statements.

If you calculate the average monthly balance for both mortgages and that brings the total under $750,000 TurboTax should clear the error. Otherwise, if your balance would still be above $750,000 I would just wait until February 17 so that it will automatically make the calculation.