1098 HELOC outstanding mortgage principal issue

[rm1177]

I have 3 1098...1 for personal residence...1 for investment and 1 for HELOC

Ques 1 - I refinanced my personal residence twice in 2020 and recd. 1098 from all lenders...even though 1098 has outstanding mortgage principal, should i enter 0 or the amount from 1098 because that lender was paid off?

Ques 2 - Everything is fine until i enter 1098 outstanding mortgage balance Box 2 from HELOC and due to that, my return drops more than 82%. It's a small HELOC of 20k with 19k balance on investment property. Since this is a exponential drop, i wanted to check with a professional. Thanks

[rm1177]

Can someone assist? Thanks

[Cynthiad66]

There is a known problem with Home Mortgage Deduction.  TurboTax is working to fix the problem and the many other issues. There are many changes due to the CARES Act that require software upgrades.  We have not been given an  expected date for the fix yet.  Please check back often to see if you can file your return.

OR

In the meantime, you can try this work around.  You did not provide the details of your Mortgage situation and therefore I am giving you a general work around that might help.  Please try this.

If there is a refi and there was an outstanding mortgage principal listed in both of them on Line 2 on the 1098. When you do put an outstanding balance in both forms, then the program adds them together and if that number is greater than $750k, then it puts you in the category to "limit interest". To get that to go away, you need to go back to the deductions section and click on "edit" mortgage interest statement. Change the line 2 of the mortgage that you no longer owe on (like the one that you refinanced and paid off) to a 0 (zero) because you have refinanced out of that loan and no longer have an "outstanding mortgage principal". Once you change one of them to zero (the one that was paid off by the refinance) then it should no longer pop up with that error at the end when you go to file. 

[rm1177]

Thanks for your email. If I change box 2 on paid off mortgages to 0, turbo tax says that amount cannot be 0 so, it doesnt let me proceed to next step. Thanks again

[DaveF1006 · Accepted solution]

My suggestion is to put $1 in box 2 just to move past the error. This will not affect your tax return and still accurately represents the mortgage loan balance that remains. Please let me know if this works and you are able to continue with your return.