Mortgage interest deduction problem
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ABA1
Returning Member

Mortgage interest deduction problem

I asked a question about this earlier but now have more details.  I received two 1098's this year because I refinanced a mortgage.  Even though I am inputting that the 1st mortgage was paid off in July, Turbotax is averaging the avg loan balance to be the combined mortgages even though one refinanced the other.  Because of this, Turbotax is only applying approximately 55% of the total mortage deduction I should have because it thinks my balance is $1.35mm instead of 675k.  Does somebody know how to fix this issue?  I have never had this issue before and I have used turbotax for years and refinanced numerous times.

2 Replies
ToddL99
Employee Tax Expert

Mortgage interest deduction problem

When inputting the 1098 for the "1st mortgage",  enter "$1" as the "Outstanding mortgage principal" amount (Box 2). This will keep the program from averaging the two mortgage balances and concluding you owed more that you actually did at any given time.

 

This will not have any effect on your tax calculation and will not generate an error in either TurboTax or with the IRS, From an economic perspective, it is accurate - you owed virtually nothing on this mortgage at the end of 2020. (The program will not accept a "0" or a blank in this field).

 

See   What do I do if I have multiple 1098s from refinancing my home debt? for a more detailed discussion of this issue.

 

 

 

 

ABA1
Returning Member

Mortgage interest deduction problem

Thank you!  That appears to have worked.

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