Mortgage servicer changed, two 1098's, confirm response to step asking if most recent form for each

[jsmchi]

[Desktop deluxe, Win]

Mortgage transferred to another servicer starting Dec, 2024. So first 11 months of 2024 used the old servicer and Dec started servicing with the new one.  The letter announcing this doesn't say loan was actually sold, just that servicing of loan was transferred. The loan was not refinanced.

I received two 1098's accordingly.  The loan origination dates on both 1098’s are the same and are the date of the original purchase in 2017. They each, as expected, show interest paid and principal amounts, etc.

Want to confirm the deductions & credits step that asks if 1098 being entered is the most recent for the loan should be “No” for the older 1098 and “Yes” for the newer 1098 that only was in effect for Dec?  I also notice that for the older 1098, its "Home Int Wkst" form, item A, in the limitation section, shows "Yes" for loan being refinanced in 2024 with a new 1098. Is that anything that matters and understand it's just a worksheet, but loan wasn't refinanced and not positive was sold.

[AmyC]

Correct on the oldest is not the most recent while the new one is the most recent. Once company could have bought the other or just your loan. It was not a refinance, HELOC, etc so NO to that question.

• If your interest is being limited due to the program adding the balances together when you should qualify for the full amount, you can just add the interest together on one form. It is just a worksheet, Sch A goes to the IRS with the final total.
• If the interest should be limited, the number of forms should not be causing extra limitations.

[jsmchi]

Thanks, but would like some clarification, sorry:

1) When you say "Once company could have bought the other or just your loan. It was not a refinance, HELOC, etc so NO to that question.", if you mean for both 1098s in the step asking if loan is a HELOC, Refi, or Neither, I have checked NEITHER from the start.  (See next item #2)

2) Still want to confirm that the "Yes" for loan being refinanced in 2024 present in worksheet for 1st 1098 is fine regardless of whether loan was sold (don't think so) or just servicer changed?

3) Don't know I follow the bullets in your reply regarding the limits or what that refers to? You mean the allowed cap for Mortgage Int and/or prop tax deductions? The total interest paid for both 1098's was 7012 (6434(1st 1098) + 578(2nd 1098) ). The program decided that w/ my situation and income, etc, the std deduction was best, so there is no Sched-A. The Int total is correctly shown in the step page for home loan deduction summary. If this helps, original loan (2017) was ~174k and bal's for the 1098's are ~153k (1st 1098) and ~150k (2nd 1098).     (I file single and Soley own the property).

[LindaS5247]

TurboTax will take your entries for your mortgage deductions (Forms 1098) and other applicable Itemized deductions and determine whether it is better for you to itemize or take the standard deduction.

 ‌If TurboTax determines it is better for you to take the standard deduction than your itemized deductions including your information from your Forms 1098 were less than the standard deduction.

In order for TurboTax to properly determine your mortgage deductions, you must answer the questions in TurboTax correctly for TurboTax to recognize that one loan is a refinance and the other was the original loan. To do this:

Enter the original loan first

1. Go to the screen that says asks of you paid a home loan in 2024, answer "Yes".
2. Enter your Form 1098 information from your original mortgage.
3. It will ask, "Is this 1098 the most recent for your loan?", Answer No." 
4. Answer the remaining questions regarding your original loan

Enter the 1098 for the new loan second:

1. On the "Your 1098 summary screen", select "Add a new 1098".
2. Enter the details from your 1098 for the refinanced loan.
3. It will ask "Is this 1098 the most recent for this loan?"  Answer, "Yes". This lets TurboTax know that this is the most recent loan balance to use for your deduction.
4. On the "Let's get some details about this loan" screen, make sure to  answer "This loan is neither of these".
5. When you see "Thanks, we got all your mortgage info" select Continue.
6. When you're all done, you'll see both of your forms on the "Your 1098 Summary" screen. 
7. You can select Done to finish.

Enter your Form 1098 from your original loan first.  Answer "No" to "Is this the most recent for your loan?"

Click here for How Does Refinancing a Home Affect My Taxes?"

Click here for How Do I Handle Multiple 1098's?

{Edited 02/17/2025|412:10 PM PST}

@jsmchi 

[jsmchi]

For the 2nd 1098, you say "4. On the "Let's get some details about this loan" screen, make sure to  answer "This loan is a refinance of a previous loan"."? However, as was originally stated, it's not a refi: "The letter announcing this doesn't say loan was actually sold, just that servicing of loan was transferred. The loan was not refinanced.".

The response to a recent almost identical Q (https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-mortgage-transferred-to-anoth... ) at end of first paragraph says NOT to answer it was a refi for 2nd 1098? Says "Don't enter that the second one was refinanced since the mortgage wasn't refinanced, just sold.". The submitter also said their loan servicer changed during the year like mine and was not a refi and didn't say if was sold.

[LindaS5247]

I have edited my response above to reflect that your second Form 1098 was not for a refinanced mortgage.

In this case you will select "This loan is neither of these" (see step 4 of "Enter the 1098 for the new second loan), and continue on by answering the follow-up questions.