Mortgage refinancing from same lender with multiple 1098 forms

[h12345]

I refinanced my home mortgage 2 times from same lender (Bank of America) and received 3 1098 forms (1 for the original loan and 2 for the refinancing).

I read through a lot of posts in the turbotax forums related to refinance and having multiple 1098 forms from the refinancing (original loan and refinancing 1098 forms)

There are 2 approaches that are suggested multiple times:

Approach 1:

1. Enter as single 1098 entry in TurboTax by combining all these forms.

2. Add the mortgage interest from original loan 1098 and refinancing 1098 forms.

3. Use info for boxes 2 (Outstanding mortgage principal), 3, 7 and 11 using form 1098 for the original loan.

4. For the loan balance as of January 1, 2022, use the principal balance for the latest refinanced loan (current loan).

There is also TurboTax official help article suggesting this with the details: https://ttlc.intuit.com/community/loans/help/what-do-i-do-if-i-have-multiple-1098s-from-refinancing-...

The URL is still showing the content at least 2 days ago (April 15, 2022, however it is deleted now on April 17, 2022).  This is how it looks like (I still have it in one of my browser tab)

Approach 2:

1. Enter all the forms and follow the instruction as in https://ttlc.intuit.com/community/entering-importing/help/how-do-i-handle-multiple-1098-mortgage-for...

The TurboTax article in that URL is updated 2 days ago (April 15, 2022) and showing the refinancing section now.

Previously, it was showing much less instruction and referring the refinancing instruction to the article in Approach 1 (to combine all mortgage interests).

My question is, which one should I use? I have been using Approach 1 and I have all my information ready to file. Is the Approach 2 the correct way now?

[RaifH]

As of now, I would use Approach 2. 

Approach 2 is a cleaner approach, as it separates out the individual loans. It would also be necessary if you purchased points on any of the old loans and they are being amortized over the life of the loan. I would also recommend this approach if you made any additional principal payments at the time of refinance, as that can affect your mortgage limit if your loan is over $750,000 (or $1 million if you purchased the home before December 15, 2017). 

Aside from the points or pay down stipulation, Approach 1 is also fine. The IRS only gets the final deductible interest amount, not any of the background entries, so it doesn't matter if you combine them all onto one form. If your mortgage principal is under $750,000, then it really shouldn't matter which one you use. If you do use Approach 1, I would actually use the Box 2 Outstanding mortgage principal from the most recent loan, not the original loan. This would make the deductible interest match the amount you would get using the other approach. 

Previously approach 2 was not calculating correctly because it was adding all the outstanding mortgage principals together, which was throwing off the deductible interest in many cases. Approach 1 was the workaround, but it also saves you some data entry.