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Mortgage Interest Loan transferred from original to another loan provider not calculated correctly by TurboTax

Have two properties and 3 forms 1098 for total two loans amount over $1m,

Main home, loan 900k purchased in 2022, no issue with entering or how TurboTax is calculating.

Second home -  purchased in 2023 , Original Loan A of $308k and $7k of interest in box 1, loan A was transferred to Loan B mid-year, with Loan B reporting additional $9k of interest. When entering all information, TurboTax reports $7k of interest under as interest from loans excluded from limitation worksheet. What am I not entering correctly?

here is my entry:

Loan A entered first:

- marked as "second home" and entered all information from boxes 1, 2, 3

- my bank form does not report any points, so none of the boxes checked for section "tell us about any points paid to....."

- answered "NO" to question "is the 1098 you're working on now the most recent for your loan"

- answered "This loan is neither of these" to the next question " Is this loan a home equity line of credit or a refinance of a previous loan?" -

- answered "Yes" to the question that loan was used exclusively on this home

 

Loan B, entered after Loan A:

- boxes 1, 2, 3 (mortgage origination date) and 11 (mortgage transfer date)

answered "YES" to question "is the 1098 you're working on now the most recent for your loan"

- answered "This loan is neither of these" to the next question " Is this loan a home equity line of credit or a refinance of a previous loan?" - since this is not a refinance.

- answered "Yes" to the question that loan was used exclusively on this home

 

There is also last section once all is completed: "We need a bit more information to wrap up this deduction": asking the outstanding balance as of January 1st, 2024 for each loan, and when did you make your final payment. 

Loan A - this loan was transferred, yet system does not allow to keep zero, therefore, I entered the outstanding balance at the time of transfer (mid-year), also entered 7/1/2023 as made final payment. 

Loan B - has outstanding balance as reported on form 1098 (should i look at my mortgage statement instead?) also since loan is not paid-off, there is no date in the next column. 

 

what is not entered correctly for Loan A or B, since my understanding is that all interest should be subject to limitation, however, somehow Loan A interest reported as excluded from limitation worksheet. what is causing this?

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1 Reply

Mortgage Interest Loan transferred from original to another loan provider not calculated correctly by TurboTax

When TurboTax gives incorrect results (not uncommon), use the formulas in IRS Pub 936 and enter the result of your own calculation.

 

@svetpetrov99 

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