How do I fill out "loan balance" page for a mortgage that sold our mortgage to a different lender?

[jmphelps13]

My mortgage company sold our mortgage to a different company. How do I fill out the following questions? 'Enter your loan balance as of January 1, 2023, or the final principal balance if you paid off this loan in 2022' & 'Enter the date you made your final payment, or leave blank if you haven't paid off your loan'.

Do I fill in "0" and the last date I made a payment to that particular company? or, something else? I didn't pay off this loan, it just changed companies because they sold it, which is why I'm not sure.

[PattiF]

You will enter the information on 1098 exactly as shown.

Please follow these instructions found in a TurboTax Help article on how to enter the information when your mortgage was sold if you have forms from both mortgage holders:

Enter the original (sold) loan first

1. Sign in to TurboTax and select Pick up where you left off or Review/Edit under Deductions & Credits.
2. Select Show more next to Your Home and Start or Revisit next to Mortgage Interest and Refinancing (Form 1098).
3. Answer Did you pay any home loans in 2022? and Continue.
4. You can either sign in to your financial institution and import your 1098 forms, or select Change how I enter my form.
5. Next, you can either upload a digital copy or Type it in myself.
6. Continue through and be sure to enter this 1098 exactly as it appears.
7. Answer the questions, and when you get to the Let's see if this is the most recent form for this loan screen, answer No to Is the 1098 you're working on now the most recent for your loan?.
8. On the next Let's get some details about this loan screen, answer Yes to Is this the original loan you used to buy your property?
9. Select Continue to be taken back to the Your 1098 info so far screen.

Then enter the 1098 for the new loan

1. On the Your 1098 info so far screen, select Add another 1098 and continue through to either import or enter your information manually.
2. Answer the questions accordingly and complete your 1098 info exactly as it appears on your form.
3. On the Let's see if this is the most recent form for this loan screen, answer Yes to Is the 1098 you're working on now the most recent for your loan?
4. On the next Let's get some details about this loan screen, answer Yes to Is this the original loan you used to buy your property? Even though the loan is with a new lender, it's still considered the original loan for this calculation.
5. When you're all done, you'll see both your forms on the Your 1098 info so far screen. You can Continue through to finish and file your return.

[jmphelps13]

I did this exactly as you stated, then when I hit "continue" it took me to a page that said "Let's wrap up your mortgage interest deduction", where it said both my 1098 Mortgage Lender Info pages needed review. When I go to this page and click "Review" it has two questions:

1. Enter your loan balance as of January 1, 2023 or the final principal balance if you paid off this loan in 2022.

2. Enter the date you made your final payment, or leave blank if you haven't paid off your loan.

For my "OLD" mortgage lender, do I fill this in with my ending principal balance when they sold my loan, and leave the "final payment date" blank? Or in the final payment date, do I write "11/1/2022", which is the final payment I made to their company?

[PatriciaV]

Please review your entries again to be sure you did NOT check a box to indicate that either 1098 was a refinance. Since the loan was sold to another lender, you did not refinance. In some cases, checking this box can result in the questions you are seeing.

[BellaChela]

@PatriciaV I have a similar but slightly different situation for which the above instructions are not working.

I have three 1098s for 2022 as follows:

Loan #1 - Chase

- This loan was sold to Chase prior to 2022 by a company that did our second refinance.

- Loan origination date was in 2020

- Secured by property I own

- For our primary home

- Didn't pay points

- Is this 1098 the most recent for your loan? --> No

- Let’s get some details about this loan --> This loan is neither of these (HELOC, refinance)

Loan #2 - Guaranteed Rate

- We refinanced in early 2022 with Guaranteed Rate

- Mortgage original date was in Jan 2022. Acquisition date was in Feb 2022.

- Secured by property I own

- For our primary home

- We paid points; I entered details on "Tell us about the points you paid on your mortgage paid"

--> QUESTION #1: Do I check the box next to "I refinanced or paid off this loan in 2022"? Not sure since the loan was purchased, which seems different than refinancing or paying off?

- Is this 1098 the most recent for your loan? --> No

- Let’s get some details about this loan --> This loan is a refinance of a previous loan

- Did you use your loan for anything besides paying off the existing loan? --> No

Loan #3 - Chase

- Guaranteed Rate sold Loan #2 to Chase.

- Origination date same as Loan #2. Acquisition date was July 2022.

- Secured by property I own

- For our primary home

- Did you pay points in 2022 when you took out the loan? --> We didn't pay points

- Is this 1098 the most recent for your loan? --> Yes

- Let’s get some details about this loan --> This loan is neither of these (HELOC, refinance)

Then I clicked "Continue" and arrived on the "Let's wrap up your mortgage interest deduction" page and have the same question that the original poster did, which is: QUESTION #2: For each of my three loans listed above, what do I enter into the two fields shown, i.e.:

- Enter your loan balance as of January 1, 2023, or the final principal balance if you paid off this loan in 2022.

- Enter the date you made your final payment, or leave blank if you haven’t paid off your loan.

Thank you you in advance for your help!

[DMarkM1]

No, do not check that you paid off or refinanced the second loan since it was just sold/transferred to a new servicer. In future years, for the now current loan unless you actually refinance, you can continue to deduct the points since it is a continuation of the second loan.  

If you refinance that third loan you will then check the box indicating a refinance and deduct the remainder of the points in that year.  Until that time you'll indicate you paid points just as you did for the second loan this year and not check the box.   

For the payoff information page:  For the first two loans you will enter the payoff information when asked to review the entries. The date of payoff for the first loan and the date of transfer for the second loan (box 11 on the most current 1098).  

The payoff amount for the first loan and the amount in box 2 of the most current 1098 for the second loan.  

Finally the ending balance for the current loan you can get from your first statement in January 2023 and leave the payoff date blank. 

[klcras]

I never get the option for 

1. On the next Let's get some details about this loan screen, answer Yes to Is this the original loan you used to buy your property? Even though the loan is with a new lender, it's still considered the original loan for this calculation.

When I say it is not a refinance it asks wis it secured by a property because the 1098 did not have box 7 checked. then it asks if I used the loan only for the home.    So no where is it connecting the 109's baqck to the original loan I had on 2021 return,

1. original loan 2021 - no 1098 for 2022 as loan was sold 12/2821

2, next 1098 was for 1/1/22- until it was sold to #3.  1098 does not have loan orgination date 

#3 loan was sold mid year. 1098 does not have loan orgination date. 

I think we are ok saying yes #3 is secured by my property and yes it was only used on that propert.  

[PatriciaV]

For the loan that was sold in 2021, you have no entries for 2022. Also, it seems you didn't receive a 1098 for 2022, which confirms this.

We recommend that you enter the 1098 for the loan that was active at the end of the current tax year FIRST and mark that it is the most recent 1098. Since this replaced your original mortgage, it is secured by your main home. This loan should have an ending balance at the end of the year.

Enter the 1098 for the sold mortgage second and mark that it is NOT the most recent. (This seems backwards, but this sequence works best in TurboTax.) The ending balance for this loan is zero.

If your 1098 has no origination date, leave that box blank.

[blid_Colorado]

I have the same problem.  And when I enter the loan balance as Zero for the sold loan it gives me an error message that says "Outstanding loan balance is missing a value".  There is a bug in TT.

[KrisD15]

Here are the steps I tested for entering two Form 1098 for a loan that was sold. 

If POINTS are not involved, please disregard those steps. 

Enter the first (oldest) 1098 and indicated that it was secured by home 
Select BOTH "new loan with points" (if points were paid) and "bought or improved home in 2024"
Enter points (if applicable) 
Select YES "This loan was paid off or refinanced with a different lender in 2024". 
(NOTE; If you indicate NO to "paid off or refinanced", the program will add the mortgage balances)
No, not most recent 1098
"HELOC or refinance?" NO
Yes, only used on this home
The points (if applicable) and interest should be added and reported on Schedule A

Enter the second 1098 
Yes, secured by home
Indicate that you bought or improved the home with this loan, but  DO NOT indicate that it was a NEW loan, DO NOT ENTER POINTS A SECOND TIME
Yes, most recent 1098
Neither HELOC nor refinance 
Yes, only used on this home
DONE

All interest and points were reported as deductions on Schedule A
I did get a "Let's Check These Entries" when I ran "Smart Check" where I had to indicate if either loan was a refinance. 
I selected "Refinance NO"
The full deduction remained on Schedule A

 

[blid_Colorado]

Thanks.  I deleted both loans and re-entered the current loan first and the original purchased loan second.  It asked me the same question but accepted zero as the value on Jan. 1.  Thanks for the advice!