Bought a home and mortgage sold to another provider in the same year

[mortgage1099problem]

Hello,

I bought a home (as a primary residence) in 2021, and my mortgage was sold to another provider in the same year (2021.) I received two 1098s for this loan. I enter the two different 1098s for each of the different providers, which includes mortgage points purchased when I originally bought the loan. From the generated Schedule A, no mortgage points were included in the deductions there.

What is the best way to make TurboTax recognize this situation correctly? In addition, will I have the option of deducting all of these points this year (rather than amortizing)?

Thank you

[Cynthiad66 · Accepted solution]

When you have more than one Form 1098 with the refinance info and both show the same balance of the mortgage, TurboTax adds the amounts together. And that may lead to a limitation of the deduction, because the balance is then overstated. To avoid this, make sure that you're not reporting the same mortgage balance twice.

Follow these steps to enter your mortgage info:

1. Gather all of your 1098 forms related to your refinance (the form from your original lender and the form from your new lender).
2. Grab a calculator and add together the box 1 amount from each form. Enter the total in TurboTax as Box 1 Mortgage interest.
3. Add the Box 5 amount from each form and enter the total as Box 5 Mortgage insurance premiums. (If you weren’t required to pay mortgage insurance, these boxes will be blank on your forms and you won’t enter anything.)

If your combined home debt is under $750,000 ($750,000 for married filing jointly and $375,000 for married filing separately), there's nothing new for you to do in 2021. Enter each 1098 as you normally would.

As far as filing taxes goes, claiming a tax deduction for mortgage points is a fairly straightforward process. Mortgage points are considered an itemized deduction and are claimed on Schedule A of Form 1040. Here are the specifics:

• Usually, your lender will send you Form 1098, showing how much you paid in mortgage points and mortgage interest
• Transfer this amount to line 10 of Form 1040 Schedule A
• If any of your points were not included on Form 1098, enter the additional amount you paid on line 12 of Form 1040 Schedule A

For many taxpayers, the process really is this simple. In some cases, though, calculating and deducting mortgage points can be tricky. With TurboTax, just answer a few simple questions and we can help you get the proper deduction for your mortgage points.

[mortgage1099problem]

Hi, Cynthia, thank you for your reply. I'm sorry, I did forget to mention that this loan was a jumbo.

To clarify, this is a loan that I acquired this year, but then was purchased by another servicer without action from me. I'm not sure if there is a distinction between that scenario and a "true" refinance.

To make sure I understand, the instructions are that I delete the two entered 1098s, and then input them as a single, combined 1098?

Thank you!

[DMarkM1]

Yes, since it is the same debt you can enter as one 1098.  The current 1098 is not a refinance it is still the original debt/loan that just has a new servicing lender.   

[sopatax]

Hi, the instruction says to add the amounts in the box 1 and box 5. what about other amounts like property taxes paid? would that also be added or just enter the amount from recent 1098? Thanks!

[JosephS1]

You can add them or you can enter them separately under Property taxes in the Deductions & Credits Section.  Just be sure not to double up if they both show the same taxes paid.

@sopatax