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mh0520
Returning Member

Mortgage Interest Deduction after Refinance

In 2019, I purchased a new home and subsequently in 2020, I refinance the mortgage on this home to reduce the interest rate. Both mortgages were held by the same lender but I received two separate 1098s.

 

I am having an issue after entering the two 1098s where it is telling me that the interested deduction needs to be limited. I have tried importing the first 1098 and making any necessary corrections to the original loans 1098. During this import, I indicated that the mortgage was paid of or refinance with a different lender (I assumed that in my case it was paid off and so I should say yes here). Additionally, I select that the loan was refinanced and no cash was taken from the loan in the refinance.

 

I'm not clear on how I should answer some of these questions. Here's what I entered for the questions regarding the refinance:

 

  • Original Loan
    • Was this loan paid off or refinanced with a different lender? 
      • Yes
    • Is this loan a home equity line of credit or a loan you've ever refinanced?
      • Yes, this is a loan I've refinanced or a home equity line of credit (HELOC).
      • A mortgage loan that I've refinanced
      • No, I have never pulled cash from this loan when refinancing it.
  • New Loan
    • Was this loan paid off or refinanced with a different lender in 2020?
      • No
    • Is this loan a home equity line of credit or a loan you've ever refinanced?
      • I'm not sure how to answer this one because it's not the original loan but I have not refinanced it.

 

So, my question is two part.

 

  1. Does what I have entered so far make sense for a refinanced mortgage?
  2. If no, what'd I do wrong? If yes, what do I answer for the new loan as to whether it is an HELOC or if I have ever refinance. I haven't refinanced it but it's also not the original loan that I took out to buy the home.

 

I think I've missed something here but I can't figure out the right combination for my scenario.

4 Replies
PattiF
Expert Alumni

Mortgage Interest Deduction after Refinance

Some TurboTax customers are experiencing an issue with their Home Mortgage Average Balance. This can cause in the Home Mortgage Interest to be incorrectly limited.

If you're experiencing  the issue above,  please go here to receive email notifications when any updates related to this issue become available.

mh0520
Returning Member

Mortgage Interest Deduction after Refinance

@PattiF 

 

Thanks for the information! I did see some discussion of this and I tried zeroing out the outstanding balance in the original loan but that didn't seem to help. I'll need to dig deeper there though. 

 

Also, do you have any comments on how I am answering these questions and how I should answer the final one? 

PattiF
Expert Alumni

Mortgage Interest Deduction after Refinance

Your answers for the questions are good. The last question should be answered with no. It is not HELOC and this new loan has never been refinanced.

 

Hope that helps. You will be sent an email when the software is fixed. Thank you.

mh0520
Returning Member

Mortgage Interest Deduction after Refinance

@PattiF 

 

Thanks  for your response.

 

As a workaround, I can just manually enter the total mortgage interest in the form where I am supposed to enter the limited interest amount. Since I'm not really required to limit my interest, this seems to be the only workaround that actually does what I need until the bug gets fixed. 

 

One of my state forms isn't going to be available until tomorrow, so I'm hoping that I could submit a correct return at that time but if not, I guess I will submit the return with this workaround. 

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