Multiple 1098's forms; Point deduction Issue when loan was sold immediately after home purchase

[nrp13]

Mortgage Point not deducting

I got two 1098’s for my home purchase in year 2023, lender sold the loan immediately after home purchase.

First lender Loan amount

BOX 1: 1552.13

BOX 2: 1007162.00

BOX 3: 05/09/2023

BOX 4: 0.00

BOX 5: 0.00

BOX 6: 8339.30 (points)

BOX 7: unchecked

BOX 8: My primary address

BOX 9: 01

BOX 10: 0(taxes paid)

BOX 11: Blank

Second lender (to whom the original loan sold to)

BOX 1: 32,912.22

BOX 2: 1007162.00

BOX 3: 05/09/2023

BOX 4: 0.00

BOX 5: 0.00

BOX 6: 0.00

BOX 7: unchecked

BOX 8: My primary address

BOX 9: 1

BOX 10: other

BOX 11: 07/01/2023

Real Estate Taxes Paid: 5,083.29

Here are my questions:

1. All my points paid are shown in the 1st 1098 and none in the second 1098. When I enter above info in TurboTax Deluxe Desktop software, it’s completely ignoring first lender Loan points when I come to deduction screen, $25,775. I made sure that I selected correct boxes and never selected refinance anywhere and chosen appropriate latest loan question.  What should I do here?

1. Another issue I am facing for adding both 1098’s, it’s asking me to enter “What was the outstanding loan balance on January 1st, 2024? If you paid this off in 2023 enter the balance on the day you paid it off.”

What should I enter for the first lender in this situation?

For second lender, I am entering Ending Balance $998,489.69 that I got from year end document.

1. On screen “Your mortgage interest is being limited”

Based on TurboTax our calculation 1098 interest the about is $25,775, which completely ignored points. However, if I remove everything from 1098 section and created one consolidated entry for both 1098’s, Lender name as first lender & second lender, I then see correct deduction number $ 32,012.

I am doing itemized deduction.

Please help me with this situation I spent my whole weekend on this issue.

[DianeW777]

It depends.  Since you have a situation where the mortgage was sold you must follow the instruction below so that TurboTax carries the full amount of the points to Schedule A. 

• Enter the points from the first 1098 on the second 1098. Indicate that the first 1098 is not the 'most recent'. This will avoid problems with your total mortgage balance exceeding the limit (assuming it is at or below $750,000 ($1 million before 2018).

You should enter the balance of the mortgage on the second 1098 or if as you indicated you combined them without issue, you can complete the return this way.  You have all the documents should you need them later.

• IRS Publication 936 (worksheet for limitation when loan balance is above the threshold)

Review the tax return before filing to be sure all are included if you itemize deductions. 

• TurboTax Desktop - Switch to Forms and review your Schedule A
• TurboTax Online - Can I print a copy of my return in TurboTax Online before I file it?

@nrp13