When your loan is sold during the year, you should receive two Forms 1098. One should be from the lender who owned the loan on January 1, 2015 and then sold it. And the other should be from the lender who bought the loan and held it on December 31, 2015.
Mortgage Interest Expense:
Property Taxes:You should enter the amounts for Mortgage Interest Expense from these Forms 1098 separately, entering each number into TurboTax as shown on each form. Once you enter the first 1098, you'll be able to select "Add a Lender". Then you'll be able to add the information from the second 1098.
The two property tax numbers can be added together and entered as one number into the box next to "Your Main Home" in the property taxes section of TurboTax.
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When I enter both of my 1098 forms, my return drastically decreases. What am I doing wrong? My original home loan was sold to another bank and so I have two different 1098 forms to enter but it seems that TurboTax sees my loan amount as greater than $1M
You will receive a Form 1098 from each financial institution that serviced your mortgage. When your mortgage is transferred to a new financial institution for servicing this is not a refinancing of your mortgage. Your beginning Outstanding Mortgage Box 2 and Mortgage origination date Box 3 do not change when the servicing of your mortgage is transferred to another financial institution.
If you have not refinanced your mortgage and have multiple Form 1098’s to report, follow these steps.
With TurboTax open enter 1098 in the search box
Click on Jump to 1098 in the results box
Follow the prompts to enter your first Form 1098
When you have completed the first Form 1098 click Add another 1098
When you have added the last 1098 click on Done
This situation applies to me for 2019 and both of my 1098s showed different Outstanding Mortgage (Box 2) and Mortgage Origination Date (Box 3) values.
Enter the older 1098 first.
Select that it was sold
Enter the second 1098
If the loan was never refinanced, the second 1098 is still Not a refinanced loan.
If the loan WAS EVER refinanced, it will always be a refinanced loan.
Box 2 will show the balance of the loan on 01/01/2019 for the first 1098 and the balance on the day the loan was sold for the second 1098.
This situation applies to me also. The original loan company sent a 1098 covering the first three months of 2019. The company they transferred the loan to for servicing sent a 1098 for the remaining nine months with the date acquired box filled in . They each have different outstanding principal balances. After entering both 1098's with (not as a refinance), TurboTax combines the balances shown in box 2 from each 1098, thinks my loan amount as greater than $1M, and wants me to apply a limit on the interest.
You will receive a Form 1098 from each financial institution that serviced your mortgage. When your mortgage is transferred to a new financial institution for servicing this is not a refinancing of your mortgage. Your beginning Outstanding Mortgage Box 2 and Mortgage origination date Box 3 do not change when the servicing of your mortgage is transferred to another financial institution.
If you have not refinanced your mortgage and have multiple Form 1098’s to report, follow these steps.
How do you select that this loan was sold? I have deleted and reentered the information numerous times and that selection does not exist.
I already tried these steps, and have the following observations:
1) The outstanding balance on each 1098 is different. The first one has the balance at the beginning of the year, while the second one has the balance on the date servicing responsibility transferred (4/1/2019).
2) The mortgage origination date (Box 3) is the same on both 1098's.
3) The second 1098 shows the date acquired as 4/1/2019 in box 11.
4) After following the steps you described, the program incorrectly combines the Box 2 amounts from each of the 1098's, and triggers the $750,000 principal limit on home loan interest deductions. This generates an error when the performing the Federal check process, loading a check mark in the "yes" box, and requiring me to enter a limit.
It appears this issue has been posted several times, and can be corrected with an update to the program.
There is a workaround for this.
For desktop versions:
For online versions:
No, you do not add the amounts together on your 1098 forms. Please enter each form separately with the information on that form. When you get to the question " Is this the original loan you took out to purchase the property?" the answer is Yes. Just because the loan was sold it is still the loan that was taken out to purchase the property.
Hi, i have the same problem here.
to recap.
1. there is no "SOLD" option when entering the first 1098.
2. if enter as the expert suggested and choose NO limit on the mortgage interest deduction, then
the state filing thinks the loan balance is almost double what it actually is.
3. none of the expert answer here answered the way to solve this problem.
did anyone managed to solved this? or did everyone just moved onto another software.
i read that this problem was already there for 2018. How can this not be solved?
frustrated
Frank
Did anyone find a solution to this? popsticker summarized it very well.
Entering two 1098 works fine for federal but state counts the balance as double than actual.
Only way to solve this problem is to combine interest from the two 1098's in one and enter as a single 1098.
Anyone, please suggest if you could find a solution to this problem.
I'm encountering the exact same issue and am at my wit's end. I can't generate the mortgage interest adjustment worksheet for California correctly (the software has deemed the two 1098's two distinct loans) and am worried I will have to amend my return.
I also received two 1098 forms because my loan was transferred to another mortgage company. I believe the second 1098 form has the combined mortgage interest from both lenders. When I compare the amounts to last year's mortgage interest they are very similar. If I add the two amounts together it comes out to over $20,000! If I use the one from the newest company it is very close to last year's amount. I would suggest just going with the newest 1098. I hope that makes sense!
I am having the exact same problem...the answer they provided is crap
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If you choose to move forward with your return and if you have a mortgage debt that is below $750,000, (or $1M for grandfathered debt incurred on or before December 15, 2017) and there was no cash used for something other than to buy, build or improve the home, this means all of the mortgage interest would be allowed to be used on your itemized deductions. If this is your situation then enter the mortgage debt for Form 1098 with the current lender, and then enter $1 or $0 for the second or former lender in that Form 1098. This will provide the correct amount of allowed mortgage interest deduction.
You may want to delete them first to begin again and also clearing your cache and cookies is a good ides (regularly).
Here's how to enter your mortgage interest statement in TurboTax:
With your return open, search for 1098 and select the Jump to link in the search results.
Follow the instructions to enter your 1098 info.
For more information use this link:
IRS Publication 936[Edited: 02/07.2021 | 10:33a PST]
That's only a solution for those who have read this thread and is absolutely not intuitive to anyone else encountering this situation. The fact that this case isn't covered clearly by the software is simply insane.
The IRS instructions for completing Form 1098 state that box 2 should be the amount of outstanding principal on the mortgage as of January 1, 2021. If the loan was no longer being serviced by that company, there would be no outstanding principal on that mortgage.
Entering '0' into box 2 for the first mortgage in your tax return is the correct way to handle the situation.
I just found that the correct answer is to use H&R Block's website. This was an absolute deal-killer for me. Ridiculous. And not one of the so-called expert preparers had a clue how to answer this.
You can enter them separately. If the total amount of your mortgage balance exceeds $750,000, then the amount might be limited.
Mortgage interest deduction limits
Since you just refinanced and if your total loan balance did not exceed $750,000 throughout the year, you will need to review your input. When you enter the information into TurboTax, be sure to do the following to ensure you are able to deduct the full amount you are entitled to.
As you go through the input screens, be sure that you have entered $0 for the loan that was paid off in Box 2 - Outstanding mortgage principal on the screen titled Let's get the details from your Home loan 1098.
You will also want to select that the loan that was refinanced and is no longer there at the end of the year is marked as paid off during the year.
Please see the following link for additional information on entering the refinanced mortgage interest expense.