1098

[Lk30]

I purchased a 2nd home April last year which is now my primary home. How do I put mortgage interest for both homes? And am I only using part of the interest from my last home? 

[DawnC]

Mortgage interest can be claimed on a maximum of two homes (main home and a second home), so you can claim all of the interest that you paid in 2020 for both homes.   The IRS lets you deduct your mortgage interest, but only if you itemize deductions. 

In addition to itemizing, these conditions must be met for mortgage interest to be deductible:

• The loan is secured, which means the lender has some kind of guarantee of payment, usually in the form of property. If a borrower defaults on payments, the lender can seize the property that’s securing the loan. If you’re buying or refinancing a home, especially if it’s your first home, the loan is usually secured by the home you’re buying or refinancing.
• The home with the secured loan must have sleeping, cooking, and toilet facilities.
• The debt can’t exceed $750,000 (or $1,000,000 if the loan was taken before December 16, 2017) to get the full deduction.
• You or someone on your tax return must have signed or co-signed the loan.
• If you rented out the home, you must have used the home more than 14 days during the tax year or 10% of the number of days you rented it out, whichever is greater.

Mortgage interest is usually reported on Form 1098, Mortgage Interest Statement. After you enter your 1098 in TurboTax, we'll ask a series of follow-up questions to make sure you're qualified to take the deduction.    You can enter multiple 1098 forms.  If your mortgage is over $375K, please use one of the alternate reporting options included here to ensure you get your maximum mortgage interest deduction.  

If you have multiple 1098 mortgage forms, you’ll enter them one at a time. After going through the steps with the first one, you can add a lender when you get to the Mortgage deduction summary screen.   Or you can combine them to avoid erroneously having your deduction limited - see What if I have more than two 1098s?.

If you want to enter them individually, click on Add a New Lender on the Home Loan Deduction Summary screen.  

 

[Lk30]

Thank you. Does the rules change if the home become a rental home? And I can claim it as long as I have to home even if I’m not living there? 

[ColeenD3]

Yes, the rules change. Once it becomes business property, it is no longer subject to limitations. Both first and second homes report mortgage interest on Schedule A. They would be subject to limitations.