Points Paid on Purchase

[User80]

I received a 1098 that had reported points paid in Box 6 from the purchase of our primary home in 2024. This loan was sold 2 months later. I also received a 1098 from the new lender with Box 6 reporting $0. When I enter the original loans 1098 it does not ask for a Box 6 where the points were reported, but asks you if this loan is secured first. I am assuming that this is 'NO' because Box 8 is empty. Therefore nothing is deductible on that 1098. Do I miss out on deducting the points because the loan was sold? The points and interest alone would put me well over the standard deduction. TIA

[KrisD15]

Yes, you should be able to claim the points paid since 2024 was the first year the loan was established to purchase the home. 

To make things easy on everyone, you can enter as one form, use ether lender name, add together and enter the interest in Box 1, outstanding mortgage principal in Box 2 only from the second (most recent) form. 

Use the original date (oldest) for box 3. Enter points in Box 6. Enter Box 8. 

The answers to the interview questions are important and confusing which is why entering as only one form is easier. Answer the questions as if you only have one form. Original loan, yes, secured by main home, yes, refinanced, no.

If you don't enter as only one form, you need to enter the first (original) first. 

There should be a screen for entering the form, so the option to enter points in Box 6 should always be an option.

Again, the answers to the interview questions are important and confusing. When entering both, answer YES the original (oldest) is the one that secured the loan on the home. Next enter the most recent and answer yes that it was a refinance (otherwise the program will add the mortgage balances) and that NO CASH was taken, it all went to the home. 

Once finished, you should see an option for taking the points all on this return, or over the life of the loan. 

[User80]

Thanks for your reply....

So, I also have a 3rd 1098 from the mortgage int I paid on the home I sold. Should I add it as well if using your first method of combining 1098's?

[KrisD15]

No, the 1098 for the home sold can't be combined since the loan balance would differ. 

Enter this 1098 first, and indicate that it was paid off. 

At the end of the interview you should see a screen asking for the balance of the paid-off loan and date it was closed.

This will be used to determine if the loan balanced ever reached the yearly limit (375,000 Married Filing Separately ; 750,000 all others) for post 2017 debt.

All three form 1098 will be used on the TurboTax worksheet. If the loan on the house you sold was paid off before the loan on the new house was taken, OR if the total of the old balance and the new balance was never over the limit, AND all the borrowed funds were used to "buy, build, or improve" the house on which the loan is secured, all the interest (and in your case points) will be deductible. 

It's a tricky section in the software because the rules regarding loan balances and what the funds are used for, were changed several years ago. All the information the program needs is not available on the 1098, so there are many questions asked after that form is entered. 

Pub 936

[User80]

This software does not ask you if the loan is paid off or anything like that. It wants to treat it as your current primary household.

[AmyC]

Follow these steps:

1. edit the 1098
2. continue until you reach the question "have you used the money exclusively on this home?" 
3. select No - I realize the correct answer might be yes, but this gets you to the right place and will calculate correctly.
4. continue
5. help me figure it out
6. continue
7. enter amount to buy and improve the home
8. enter the balance on Dec 31 - would be zero,  if the house sold
9. mark the box that the loan was paid off during 2024
10. enter the date of final payment
11. continue