I have three 1098s. The first was from a refi in 2018. I refie'd again in 2019 and got a second 1098. SO far, the input is straightforward. Then my mortgage got transferred to a new servicing company and I got a third 1098. When I enter the third 1098, TT is treating it like a second loan, rather than a transfer. For the third 1098, It asks if this is an original loan (i say NO). Then the only two options it offers me are HELOC or REFI (and it is neither, since it's just a servicer transfer). So the mortgage interest limitation worklsheet keeps trying to limit my mortgage deduction amount. I don't know what to do.
Since it is a transfer, you would answer "yes" to if this is the original loan. Transferring to a different servicer doesn't change the nature of the loan.
If the refinanced loan was transferred it wouldn’t be the original loan, would it?
If the refinanced loan isn’t considered the original loan, how can it be the original when it is transferred. As stated earlier, TT doesn’t give an option of a transferred loan.
If it was ever refinanced it will always be a refinanced loan, even if transferred to a new lender.
I have 2 1098 forms, since my mortgage got transferred in 2019. How do I prevent both mortgage principles from being counted under the mortgage interest deduction limit if I do this?
@KrisD Thanks for the clarification. The answer to the op confused me. I couldn’t understand how a transferred refinanced loan could be classified as an original.
There is a bug in the software. TT has been working on a fix for over a month.
There have been 2 work-arounds suggested by other users.
The first is to go into the actual form/worksheet and check the “No” box. (there was a post stating this solution would invalidate any audit guarantee from TT)
The second is to answer the tax limitation question “No”, do not click continue, save the return, back out of the program, reopen the program and manually continue your return at the next step.
I have actually tried both solutions and both cleared all the error checks and were deemed ready to efile. After reviewing the paper form I successfully efiled using the second work around. My return has been accepted and approved by the IRS and state.
Does not resolve the problem. It is still counting the transferred loan as a new loan. We need a better solution
Some TurboTax 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 tax return.
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See this TurboTax Help.
This is what I found under TurboTax On Demand Tax Guidance:
1. Input just 1 1098 to cover the refinance.
2. Gather all your 1098s related to the refinance.
3. Separately add up the amounts in Boxes 1, 5 and any property taxes paid.
4. Box 1, Box 5 and Property Taxes - input the total amounts for each on the refinanced debt.
5. Box 2 - Input the amount of debt on 01/01/2020.
5. Box 3 - Mortgage origination date - Input the oldest date on your 1098s related to the refinance.
Based on the context help available in the desktop version of TT Premier, we have to add the interest amounts and report it under the original 1098. It is so unfortunate that TT asks you to sum up the interest amount as a workaround for a defect should have been fixed long back. I could see posts dating back a couple of years,