Mortgage and Home Improvement Loan - Two 1098's

[edoughig]

We have a first mortgage and a second lien home improvement loan so we have two 1098's from two different lenders. We enter them both in the applicable space and it reduces our mortgage interest considerably (by $13k). When I ask how the amount was calculated, it returns the error, "Your $x,xxx of mortgage interest is the same as HP3L12 because true." Obviously this is an error. I've seen workarounds but always to do with recently refinanced mortgages. Our first mortgage was refinanced but in 2017, before we took out the secured home improvement loan. What should we do? Both mortgages together are well under $750,000.

[JoannaB2]

 Some Turbo Tax customers are experiencing an issue with their home mortgage average balance.  This can cause the home mortgage interest to be incorrectly limited.  This may be affecting your return.  See  this link  for what to do if you have multiple 1098s.  See also this Turbo Tax Help

[edoughig]

Thanks, I saw that, but these are two different lenders and the help says "Any 1098s not directly related to the refinance should get entered separately." Should we ignore that and just enter one 1098 with two completely different loans combined together?

[JohnB5677]

No, I recommend a different alternative.

If you've refinanced or had your mortgage lender changed, the outstanding mortgage principal listed in the combined total of them on Line 2 of the 1098 will be too large.

When you put an outstanding balance in both forms, then the program adds them together and if that number is greater than $750k, then it puts you in the category to "limit interest".

To get that to go away, you need to go back to the deductions section and click on "edit" mortgage interest statement. Enter both 1098's.

Change the line 2 of the mortgage that you no longer owe on (like the one that you refinanced and paid off) to a 0 (zero) because you have refinanced out of that loan and no longer have an "outstanding mortgage principal".