If we sold our home, do we zero out the Outstanding Mortgage principal on our 1098 from that house?

[dianabassett87-g]

We sold house

[JohnW152]

No.  

If you’re entering mortgage interest from Form 1098 on your 2021 return, and you sold the house in 2021, you still need to report the outstanding mortgage principal.

Just be aware that box 2 of Form 1098 displays the outstanding principal on the mortgage as of January 1, 2021.  

[dianabassett87-g]

Thank you for responding @JohnW152 . Do you mean box 2 is displaying the outstanding principal from Jan. 1st, 2022? We paid off the mortgage in August 2021 and bought our new house in August 2021. So I have a 1098 on the house we sold and a 1098 (substitute) on the house we bought. So I should just fill it in as having an outstanding principal even though there isn't?

[DaveF1006]

Box 2 is the outstanding mortgage as of Jan  1, 2021. For the 1098 on your new house, Box 2 is blank because there was no outstanding loan balance on that loan since the loan didn't exist on 01/01/2021.

@dianabassett87-g

[dianabassett87-g]

The house we bought has the outstanding mortgage principal....

[DaveF1006]

Yes, report the 1098 on the old house first, with the outstanding mortgage balance a of 01/01/2021. Enter the second 1098 without listing the mortgage balance in line 2 because there was no outstanding balance on that loan on 01/01/2021.

@dianabassett87-g

[Hilllee]

I have a couple questions pertaining to the 1098.  I also sold and bought a house in 2021.  The 1098 from the sale of my house is showing $0 for Real Estate Taxes Paid in Box 10.  However, I can see on the settlement statement from the sale of my house that I paid a portion of the 2021 property taxes, they were prorated based on the time we lived in that house.  So when entering the 1098 info, should I enter 0.00 as is on my 1098 or the tax I paid according to my settlement statement from the sale of the house?

[PattiF]

You should not enter the real estate taxes on the 1098. They are only on the 1098 if you pay them through an escrow account.   If you paid real estate taxes that are not on Form 1098, enter them on the Real Estate Tax (Property Tax) line instead.     Don't add the amount to the 1098.  

@Hilllee

[Hilllee]

I'm not seeing the Property Taxes line.  I'm working with the free online version of TurboTax.  I'm not trying to itemize, just taking the standard deduction, so do property taxes matter for my Federal return?  I'm in Michigan and there is a Homestead Property Tax Credit.  Will it ask me about property taxes for that then once I get to my state return?

[Vanessa A]

If you are not itemizing your return, there is no reason to enter your property taxes on your return in the federal section.  When you get to the MI section, you will then be asked about your property taxes when you go through the Homestead Property Tax section. 

[Stu8]

QUESTION: If your 1098 for house bought in July 2023, shows a mortgage princible in BOX 2, and I leave it blank, I get a flag with the software. Do I need to request a new 1098? 

[MonikaK1]

No, you don't need to request a new 1098. Enter the full amount of the loan you took out when you purchased the home in box 2. You can find the amount in your escrow settlement documents or loan documents.

Box 2 of Form 1098 shows the outstanding principal on the mortgage as of January 1 of the calendar year. If the mortgage originated in the calendar year, it should show the mortgage principal as of the date of origination. If the recipient/lender acquired the loan in the calendar year, it should show the mortgage principal as of the date of acquisition.

See here for an explanation of the boxes on Form 1098.